Russell 2000 Index Information

The Russell 2000 index consists of the lower two thirds of the Russell 3000 Index. It has become the most popular of all the Russell indexes and is predominately used as a benchmark for small cap stocks.

Mutual funds that invest into small cap stocks will look at this index and compare their performance with it. If the fund beats the index it is considered beating the market. Here is a chart of the past performance of the index.

The Russell 3000 was first created in 1984 to track the market as a whole and to give investors an idea of how well their mutual funds and money managers are doing compared to the average small cap section of the market.

Reconstitution

Every year in June the index is re-examined and some stocks are added while other stocks are removed from the index. This is called the “reconstitution” period and it is set to take place on the third Friday of June every year.

Trading

There are a few Ultra Russell 2000 ETFs such as the UWM which allow investors a way to trade the index with high leverage. The non-leveraged index is also tradable through the symbol, $RUT, however only the options can be traded, not the index itself. As a result $RUT has become a stock that many option traders will watch when they want to trade small cap stocks.

Side Note

In addition to the Russell 2000 Index there are a variety of other indexes that have broken off of the Russell 3000, but which are still a part of the index. These include the Russell 2500 (bottom 2500 in the index) the Russell 50 (top 50 stocks in the index) and the Russell 200 (top 200 stocks in the index).

Other Indexes

The Russell is not the only index used to show how well the overall stock market has performed in the past. There are a variety of other ETFs to watch. Here are a few to consider.

S&P 500 History - This index hosts the top 500 companies in America and is considered to be the be index to beat by most mutual fund owners.

NASDAQ History - The NASDAQ started out as a place to trade over the counter stocks, but now it is a major stock exchange which has surpassed the NYSE in trading volume.

Dow Jones Industrial Average History – The Dow was originally started by Charles Dow in order to track the 12 largest companies in America.

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