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.
Exchange-Traded Fund (ETF)
Top 5 Russell 2000 ETFs
Name | Issuer | Assets Under Management | Expense Ratio |
|---|---|---|---|
iShares Russell 2000 ETF (NYSEMKT:IWM) | BlackRock | $71 billion | 0.19% |
Vanguard Russell 2000 ETF (NASDAQ:VTWO) | Vanguard | $13.6 billion | 0.07% |
Vanguard Russell 2000 Growth ETF (NASDAQ:VTWG) | Vanguard | $1.3 billion | 0.1% |
Vanguard Russell 2000 Value ETF (NASDAQ:VTWV) | Vanguard | $877.9 million | 0.1% |
Direxion Daily Small Cap Bull 3X Shares (NYSEMKT:TNA) | Direxion | $2.24 billion | 1.03% |
1. iShares Russell 2000 ETF
The iShares Russell 2000 ETF 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. Its top five stock holdings are Bloom Energy (BE -3.28%), IonQ (IONQ -1.76%), Credo Technology (CRDO -1.36%), Oklo (OKLO -1.70%), and Rigetti Computing (RGTI -4.72%), which had individual weights of between 0.61% and 0.82% in mid-2025.
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.
2. Vanguard Russell 2000 ETF
The Vanguard Russell 2000 ETF is the best option if you're looking for a low expense ratio, as it charges only 0.07% 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 almost 20% of its holdings. It also pays a slightly better dividend yield, at 1.2%, and is less concentrated in its top holdings than the iShares Russell 2000 ETF.
3. Vanguard Russell 2000 Growth ETF
Some ETFs are divided into value and growth funds to make it easier for investors to get exposure to one or the other, and Vanguard has done that here. The Vanguard Russell 2000 Growth ETF invests in stocks held by the Russell 2000 Growth index and is riskier and more volatile than the ETFs that track the Russell 2000.
With 1,119 stocks with a median market cap of $3.9 billion, many of its top holdings are the same as those of the ETFs that track the broad Russell 2000. For instance, its five biggest holdings are Credo Technology, Fabrinet (FN +0.28%), Kratos Defense & Security (KTOS +1.80%), Bloom Energy, and IonQ. Those five stocks comprise between 0.71% and 1.26% of the fund.
The biggest sector in this growth ETF is industrials. That sector makes up 24% of the total fund, and the ETF has a P/E ratio of 27.
4. Vanguard Russell 2000 Value ETF
As you might guess, the Vanguard Russell 2000 Value ETF is the counterpart to Vanguard's growth ETF. Because it holds small-cap stocks, Vanguard describes it similarly to its Russell 2000 Growth ETF, saying the value ETF offers high potential for investment growth but has more market volatility than funds that hold bonds.
This value ETF holds 1,447 stocks. Its largest holdings present a different makeup from the growth ETF or Russell 2000 ETFs.
Its top five holdings are EchoStar (SATS -1.82%), UMB Financial (UMBF -0.09%), Jackson Financial (JXN +0.56%), Fluor (FLR +0.59%), and Taylor Morrison (TMHC -0.36%). Each holding makes up between 0.49% and 0.62% of the fund.
Financials are the biggest component of this value ETF, making up 27.4% of the index. This makes sense, considering financials typically trade at low earnings multiples and aren't known for growth.
The ETF also offers a yield of 1.83%, showing it has more exposure to dividend stocks than the other ETFs on this list. The Vanguard Russell 2000 Value ETF trades at a P/E ratio of 14.8, making it cheaper than the broad-based Russell 2000 ETF.
5. Direxion Daily Small Cap Bull 3X Shares
Another option for investing in Russell 2000 ETFs is to choose a leveraged ETF, such as the Direxion Daily Small Cap Bull 3X Shares. 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 intended for long-term ownership, as they decay over time. They are best used for short-term purposes.
Why you should consider a Russell 2000 ETF
There are a number of reasons why you might want to invest in a Russell 2000 ETF. Let's take a look at a few of them:
- 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.
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Important factors to consider when selecting a Russell 2000 ETF
If you're looking to invest in a Russell 2000 ETF, there are a number of factors you should consider.
First, determine your goal. 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.
If you want a balance between growth and value, you might consider an ETF like the iShares Russell 2000 or the Vanguard Russell 2000 ETF. On the other hand, if you're looking to make a short-term, leveraged bet, the Direxion Daily Small Cap Bull 3X Shares could be a good choice.
Before you choose your Russell 2000 ETF, it's worth asking why you want to invest in small-cap stocks. It could be because 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.
Answering those questions will help determine which Russell 2000 ETF is the best for you.
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