What Is the Russell 2000 Stock Market Index?

By Keith Noonan – Updated Jun 28, 2025 at 12:21 AM | 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 (DJINDICES:^DJI) and S&P 500 (SNPINDEX:^GSPC) 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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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 -1.36%) 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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An infographic explaining what makes index funds safer investments than individual stocks. — Image source: The Motley Fool.

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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.

One good example is the Vanguard Russell 2000 ETF (VTWO -0.77%), 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.

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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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.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Hims & Hers Health. The Motley Fool recommends Sprouts Farmers Market. The Motley Fool has a disclosure policy.