What Is the Russell 2000 Index?

Russell 2000 Index Definition

The Russell 2000 is a market-cap weighted index that bases its weighting on shares outstanding.

Frank Russell started the Index in 1984.

It primarily focuses its attention on 2,000 of the US’s small-cap companies and is the standard for any investor looking to invest in small-cap companies.

Defining Russell 2000 Index in Simple Terms

The Russell 2000 Index is made up of the smallest 2000 companies in the Russell 3000 Index, which tracks about 98% of the U.S.’s publicly traded stock.

Similar to the Russell 2000

The Russell 2000 shares a lot of similarities with the S&P 500.

Both are market-weighted indexes, and base their weighting on outstanding shares.

In fact, it could be said that the Russell 2000 is to small-cap investors what the S&P 500 is for large-cap investors.

The Purpose of the Russell 2000

In other words, it is the most popular and widely looked to authority on the status of America’s small-cap companies.

As a result, the Russell 2000 is often looked to as an indicator of the American economy’s health.

Given that typically, small, domestic-focused businesses are hit first and hardest in times of economic downturn.

What Is the Russell 2000 Index FAQs

The Russell 2000 is a market-cap weighted index that bases its weighting on shares outstanding.
The Russell 2000 Index is made up of the smallest 2000 companies in the Russell 3000 Index, which tracks about 98% of the U.S.’s publicly traded stock.
The Russell 2000 Index is intended to reflect the status of America’s small-cap companies.
Some experts say the Russell 2000 is to small-cap investors what the S&P 500 is for large-cap investors.
Typically, small, domestic-focused businesses are hit first and hardest in times of economic downturn. These types of businesses are exactly what the Russell 2000 tracks.
True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.