What is the Russell 2000?

The Russell 2000 index, sometimes abbreviated as Russell 2K, is the most widely used index of small-cap stocks -- those with a relatively small market capitalization.

What are stock market indexes?

A stock market index shows how investors feel an economy is faring. An index collects data from a variety of companies across industries. Together, that data forms a picture that helps investors compare current price levels with past prices to calculate market performance.

What is the Dow Jones?

The Dow Jones Industrial Average is a stock index that tracks 30 of the largest U.S. companies. Created in 1896, it is one of the oldest stock indexes, and its performance is widely considered a useful indicator of the health of the entire U.S. stock market. The Dow Jones Industrial Average index is managed by S&P Dow Jones Indices, a joint venture majority controlled by the financial information and analytics company S&P Global (NYSE: SPGI).

What is the 10-year average return on the Russell 2000?

The Russell 2000 index had recorded an annual average total return of 6.7% over the 10-year period through June 15, 2025. The index recorded a dividend-adjusted total return of 90.5% across the decade-long period.

What Is the Russell 2000 methodology?

The key methodology for determining the components of the Russell 2000 involves selecting the 2,000 smallest companies by market capitalization from the Russell 3000 index. To be included in the Russell 3000 index, companies must meet certain minimum share price and free float requirements -- and these criteria for inclusion extend to the Russell 2000 index. The Russell 2000's components are updated at the end of June each year, and companies that are either too big or too small are removed from the index.

What's the highest the Russell 2000 has ever been?

The Russell 2000 index hit an all-time high of 2,466.49 on Nov. 25, 2024, but closed out the daily trading session below that level. Meanwhile, the index's highest ever daily closing price stands at 2,442.74 and was achieved on Nov. 8, 2021.

What is the smallest company in the Russell 2000?

Mondee Holdings was the smallest company included in the Russell 2000 index as of June 15, 2025. The stock had lost virtually all of its value over the last year, but it was still included because the annual reconstitution of the index had not taken place yet.

Complete Guide to the Russell 2000 Stock Market Index

Your Complete Guide to the Russell 2000 Stock Market Index

By Keith Noonan – Updated Mar 4, 2026 at 5:12 PM EST | Fact-checked by Frank Bass

Key Points

Russell 2000 Index tracks 2,000 small-cap U.S. companies, offering insights into this market segment.
It is market cap-weighted, updated annually to reflect the small-cap universe effectively.
Investors can access Russell 2000 through ETFs like the Vanguard Russell 2000 ETF.

While the Dow Jones Industrial Average (^DJI +0.36%) and S&P 500 (^GSPC +0.44%) get most of the headline attention, it's important for investors to understand there are many different stock indexes. Of the most popular indexes, one that doesn't track large companies, is the Russell 2000 index, widely considered the benchmark for smaller U.S. stocks.

With that in mind, here's a rundown of what investors should know about the Russell 2000 index, how it works, and whether it could be a smart investment choice.

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An infographic defining and explaining the Russell 2000 Index. — Image source: The Motley Fool.

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How the Russell 2000 is different

So, what makes the Russell 2000 different from the rest?

Smaller and more volatile companies: The stocks in the Russell 2000 are smaller than those in "headline" indexes such as the S&P 500. Many are newer growth companies that tend to be more volatile than their larger counterparts. In other words, don't be surprised if the Russell 2000 experiences more dramatic swings than large-cap indexes.
Higher growth potential: While they tend to be more volatile, smaller-cap stocks typically have much more growth potential than larger companies. Think of it this way: It would be far more difficult for Apple (AAPL +1.12%) to double in size than for a newer tech company with a $1 billion market cap. So, while their price swings tend to be more dramatic, over long periods, small-cap stocks typically outperform large-cap stocks.
More diversified: Because it focuses on smaller companies and contains 2,000 of them, the Russell 2000 is more diversified than other popular indexes such as the S&P 500. For one thing, it is less top-heavy and doesn't depend as much on the performance of just a few large companies. The median market cap of a Russell 2000 stock was $840 million as of May 31, 2025.

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Industry	Percentage of Index
Industrials	19.6%
Financials	18.7%
Healthcare	15.9%
Consumer Discretionary	11.5%
Technology	10.9%
Real Estate	6.4%
Energy	4.9%
Basic Materials	3.9%
Utilities	3.5%
Consumer Staples	3%
Telecommunications	1.8%

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Exchange-Traded Fund (ETF)

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.

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An infographic explaining the pros and cons of investing in index funds. — Image source: The Motley Fool.

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One good example is the Vanguard Russell 2000 ETF (VTWO +0.36%), which invests in all the stocks in the index according to their relative weights. With a small (0.10%) expense ratio, the ETF's fees are low, and its long-term performance should be virtually identical to the index.

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Is investing in the Russell 2000 index right for you?

Investing in the Russell 2000 is a great way to get exposure to the exciting world of small-cap investing without relying too heavily on the performance of any single company. The vast diversification of the index should help to smooth out the volatile nature of investing in smaller stocks while maintaining the potential for market-beating performance.

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Russell 2000 stock market index FAQ

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About the Author

Keith Noonan is a contributing writer at The Motley Fool covering technology, consumer goods, and other sectors. He holds a bachelor’s degree in English from Boston College.

TMFNoons

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Applied Industrial Technologies, Hims & Hers Health, Mueller Industries, and Sprouts Farmers Market. The Motley Fool recommends the following options: long January 2028 $75 calls on Sprouts Farmers Market and short January 2028 $85 calls on Sprouts Farmers Market. The Motley Fool has a disclosure policy.

Your Complete Guide to the Russell 2000 Stock Market Index

Key Points

How the Russell 2000 is different

Exchange-Traded Fund (ETF)

Is investing in the Russell 2000 index right for you?

Related investing topics

How to Invest in iShares Russell 2000 ETF (IWM)

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Russell 2000 stock market index FAQ

About the Author

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Stocks Mentioned

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Exchange-Traded Fund (ETF)

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Russell 2000 stock market index FAQ

What is the Russell 2000?

What are stock market indexes?

What is the Dow Jones?

What is the 10-year average return on the Russell 2000?

What Is the Russell 2000 methodology?

What's the highest the Russell 2000 has ever been?

What is the smallest company in the Russell 2000?

What is the Russell 2000 index?

How the Russell 2000 compares to other major stock indexes

Russell 2000 by industry

How to invest in the Russell 2000 index fund

Is investing in the Russell 2000 index right for you?

Related investing topics

FAQ

How does the Russell 2000 index work?

How the Russell 2000 is different

Small-cap subindexes in the Russell 2000

Russell 2000 companies list