There are a number of reasons an investor would want to own a Russell 2000 ETF. The Russell 2000 index tracks a broad range of small-cap stocks, so if you want exposure to hundreds of small-cap stocks, the easiest way is with a Russell 2000 ETF.
The underlying index tends to be more volatile than other stock market indexes, such as the S&P 500, which tracks large-cap stocks. So, a Russell 2000 ETF is better suited to investors with a high risk tolerance. But with interest rates currently coming down, now could be an opportune moment to buy a Russell 2000 ETF since the index tends to do well when interest rates are falling.
In the article below, we'll discuss the key components of the best exchange-traded funds (ETFs) that track the benchmark Russell 2000, including their assets under management, expense ratios, investment results, unique aspects, and other attributes.
Top 5 Russell 2000 ETFs to consider
Name | Issuer | Assets Under Management | Expense Ratio |
|---|---|---|---|
iShares Russell 2000 ETF (NYSEMKT:IWM) | BlackRock | $71.9 billion | 0.19% |
Vanguard Russell 2000 ETF (NASDAQ:VTWO) | Vanguard | $14.5 billion | 0.06% |
Vanguard Russell 2000 Growth ETF (NASDAQ:VTWG) | Vanguard | $1.36 billion | 0.06% |
Vanguard Russell 2000 Value ETF (NASDAQ:VTWV) | Vanguard | $1.1 billion | 0.06% |
Direxion Daily Small Cap Bull 3X Shares (NYSEMKT:TNA) | Direxion | $1.38 billion | 1.05% |
1. iShares Russell 2000 ETF
NYSEMKT: IWM
Key Data Points
The iShares Russell 2000 ETF (IWM +0.73%) is the largest Russell 2000 ETF by far, with more than $60 billion in assets under management and a reasonably low expense ratio of 0.19%. The index seeks to track the investment results of the Russell 2000 index.
No single stock makes up more than 0.9% of the total ETF except for Bloom Energy, which makes up 1.4% of the fund. The rest of it top five stock holdings are Credo Technology (CRDO +0.10%), Fabrinet, Coeur Mining, Echostar (SATS +3.69%), which had individual weights of between 0.56% and 0.8% in April 2026.
That group of stocks shows how the ETF offers diversification in disruptive and emerging technologies by including companies focused on renewable energy, quantum computing, and nuclear energy. The iShares Russell 2000 ETF offers a dividend yield of 1%. The stocks it holds are also cheaper than the market average since the fund trades at a price-to-earnings (P/E) ratio of just 19.5 as of April 2026.
2. Vanguard Russell 2000 ETF
NASDAQ: VTWO
Key Data Points
The Vanguard Russell 2000 ETF (VTWO +0.76%) is the best option if you're looking for a low expense ratio, as it charges only 0.06% of assets invested to participate in the fund. The ETF was started in 2010, and since then, its returns have mirrored those of the Russell 2000 index, up roughly 10% annually.
Its top holdings are similar to those of the iShares Russell 2000 ETF, with industrials as its biggest sector, accounting for 19% of its holdings. It also pays a slightly better dividend yield, at 1.26% as of April 17, 2026, and is less concentrated in its top holdings than the iShares Russell 2000 ETF.
3. Vanguard Russell 2000 Growth ETF
NASDAQ: VTWG
Key Data Points
NASDAQ: VTWV
Key Data Points
5. Direxion Daily Small Cap Bull 3X Shares
NYSEMKT: TNA
Key Data Points
Another option for investing in Russell 2000 ETFs is to choose a leveraged ETF, such as the Direxion Daily Small Cap Bull 3X Shares (TNA +1.97%). Leveraged ETFs use options and other tactics to magnify the movements of the underlying index fund.
That makes them riskier than typical ETFs and index funds but also offers the potential for outsize returns. Using those tools, the ETF seeks to provide a return that is 200% of the benchmark's return in a single day.
The ETF's five largest holdings and their weightings are the same as those of the iShares Russell 2000 ETF. In fact, Direxion primarily invests in the iShares Russell 2000 ETF and buys swaps to add leverage.
If you're bullish on the recovery and want to own small caps, a leveraged one like the Direxion ETF is a good choice. However, these leveraged ETFs aren't generally intended for long-term ownership, as they decay over time. They are best used for short-term purposes.
How to buy Russell 2000 stocks
1. Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
2. Search for Russell 2000 stocks: Enter the ticker into the search bar to bring up the stock's trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Benefits and risks of investing in Russell 2000 stocks
Small-cap ETFs have their own benefits and risks. Keep reading to learn how those can affect you.
First, the benefits:
- ETFs can be a useful time-saver for investors, especially for a massive index like the Russell 2000. Researching and evaluating 2,000 small-cap stocks isn't realistic for most investors.
- ETFs also make it easy to diversify. A Russell 2000 ETF offers exposure across every stock market sector, though industrials tend to be the largest.
- A small-cap ETF can be a good choice for risk-seeking investors. Historically, the Russell 2000 has outperformed the S&P 500 during bull markets, and it tends to be more volatile and more sensitive to interest rates, rising when they fall.
- Most investors will have most of their stock investments in large-cap stocks. A Russell 2000 ETF provides a good way to diversify and get exposure to small stocks that you may not be familiar with.
Now, here are some of the risks:
- The Russell 2000 has historically been more volatile than the S&P 500, so a Russell 2000 ETF is riskier than an S&P 500 index fund, especially over the short term.
- The Russell 2000 tends to underperform the S&P 500 in bear markets as small caps are more exposed to bankruptcy and debt. Therefore, a Russell 2000 ETF can be a particularly bad investment in a bear market.
- The Russell 2000 has underperformed the S&P 500 over most recent timelines. While that's not guaranteed to continue, it does make the bar for investing in the small-cap ETF higher than it would be.
- The Russell 2000 has missed out on much of the gains from the AI boom as it lacks exposure to the "Magnificent Seven" stocks and the larger semiconductor stocks that have been the biggest winners.
Should you invest in Russell 2000 stocks?
Whether you should invest in Russell 2000 stocks or ETFs will depend on your investing goals and style.
Thanks to the variety of small-cap ETFs, Russell 2000 ETFs offer both options for both growth and value investors.
If you're looking for growth, you'll want to invest in the Vanguard Russell 2000 Growth ETF. If, on the other hand, you're partial to value stocks, you'll probably want the Vanguard Russell 2000 Value ETF. Whether you choose growth or value will depend on your risk tolerance and other investing preferences.
Before you invest in a Russell 2000 ETF, it's worth asking why you want to invest in small-cap stocks. Some good reasons to invest are that you are looking to diversify from the large-cap stocks found in the S&P 500, or you're anticipating that interest rates will fall and small-cap stocks will benefit. It may also be because small-cap stocks trade at a lower valuation.
The bottom line on small-caps is that if you're looking to diversify away from large-caps or gain exposure to a more volatile, macroeconomically sensitive part of the stock market, investing in Russell 2000 stocks can be a smart move for you.
Related investing topics
FAQ
Best Russell 2000 ETFs FAQ
About the Author
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy and Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.
