Small-cap 2000 became one of the major indices in the world. The value of these indices from 2013 to 2022 has experienced a trend in the bull market. It formed a high of 2,299 in 2021, but the price is currently dropping to the level of 1,782.
At a glance, Small cap 2000 is another name for Russel 2000’s indices. These are the indices that become the benchmark for 2000 US companies with small capitalization.
Contents
About Small Cap 2000
Russel is a company that became the pioneer of Russel 2000 or small-cap 2000 in 1984. Practitioners and researchers state Russel 2000 considers that the small-cap 2000 has its own distinct character about risk and return that can provide a potential return over time.
The overarching goal of Small-Cap 2000 is to benchmark the 2,000 equity of participating United States companies that are included in small-cap companies. As ETF trading grows, it becomes more effective to gain exposure to small stocks.
Small-cap 2000 became one of the benchmarks that determined the direction of the US economy, which focused on small companies. This index manages is FTSE Russell. Many Investors often compare small-cap mutual funds and their relationship to index movements because the index value is a reflection of the entire sub-section of the market rather than a narrower index.
What is considered small-cap?
A small-cap company refers to a company with a valuation below 2 billion USD. Most small-cap companies are young companies with a market cap of between $300 million and $2 billion.
How to calculate the small-cap is to multiply the stock price by the total number of shares issued in the market that are publicly owned.
Most small-cap companies come from young companies, so the market valuation is still small.
Young companies that make good growth, by buying shares early clearly provide an advantage because the performance of the value of the shares will increase. However, young companies also have a risk, if the company fails, then the performance of the stock value is also bad.
What stocks are in the small-cap 2000?
Small-cap 2000 or Russell 2000 is a collection of indexes to list stocks that have small caps. This weighs more than 2000 small-capitalization companies, if a company already has a large capitalization it will be included in the Russell 1000, which is a group of shares of companies that include large capitalization.
Maybe you still remember Gamestop whose stock price went up high, this company was removed from the Russell 2000 list and included in the Russell 1000 list, which has a larger capitalization.
Because the Russell 2000 stock list consists of thousands of companies, the total Small Cap products dominate 93% greater than MSCI 1750, S&P 600, CRSP US Small Cap, SSGA US Small Cap, and Dow Jones US Small Cap.
Top 10 companies in Small-cap 2000
Annualized risk -Standard Dev (%) Russell 20001 years 15.50, 3 years 24.13, 5 years 21.55, 10 years 18.25
The top 10 companies in the Russell 2000 index from the latest data referring to the FTSE Russell update on April 30 are:
- Ovintiv Inc company sector industry Energy.
- Avis Budget Group Inc. company sector industry Consumer Discretionary.
- Antero Resources Co company sector industry Energy.
- Bj’s Wholesale Club Hdlg company sector industry Consumer Discretionary.
- Chesapeake Energy company sector industry Energy.
- AMC Entertainment company sector industry Consumer Discretionary.
- Tenet Healthcare Corp company sector industry Health Care.
- Southwestern Energy Co company sector industry Energy.
- Eastgroup Properties Inc company sector industry Real Estate.
- Tetra Tech Inc. company sector industrials.
Total return year to year of Russel 2000 and Russel 3000
Souirce FTSERussel
What Industry sector on the Russell 2000?
Of the thousands of companies listed in the Russell 2000 index, they can be divided into 11 industry sectors.
- Financials.
- Industrials.
- Healthcare.
- Consumer Discretionary.
- Technology.
- Real Estate.
- Energy.
- Basic Materials.
- Utilities.
- Consumer Staples.
- Telecommunications.
Is Russell 2000 a small-cap?
Data from FTSE Russell shows an Average Market Cap ($-WTD) of $3,127 billion, with a Median Market Cap of $0.923 billion and a Largest Stock by Market Cap of $15,109 billion.
The performance of the Russel 2000 Index from year to year is that since 2017 it has been 14.65, 2018 has dropped to 11.01, 2019 has increased by 25.52, 2020 has fallen to 19.96, 2021 has fallen to 14.82, 2022 has fallen to -16.69.
What is the difference between the Russell 2000 and Russell 3000?
Russell 3000 is an index containing 3000 stocks which is a list of the largest companies in the United States. This index was launched by FTSE Russell and has the Russell 2000 and Russell 1000 series as sub-indexes with different ratings.
All stocks in Russell 2000 are included in the list of stock indexes in Russell 3000. The difference is that the Russell 2000 index is a list of stock indexes of companies with the smallest capitalization of 2000 companies.
The difference between Russell 1000 and Russell 2000
The Russell 1000 is a series of the Russell 3000 which has the largest capitalization in the Russell 3000 index. The Russell 1000 is an index of the 1000 companies with the largest capitalization in the Russell 3000 index.
It might be said that the Russell 3000 index is the parent of the Russell 2000 index and the Russell 1000 index.
The thing that distinguishes the Russell 1000 index from the Russell 2000 index is its market capitalization. On Index 1000 is a list of stock indexes with the largest capitalization. While the Russell 1000 is the stock index with the smallest capitalization.
However, sometimes companies listed in the 2000 stock index can be added to the Russell 1000 index because they have experienced a large increase in market capitalization.
Is Russell 1000 a small-cap?
Data from FTSE Russell shows the Average Market Cap ($-WTD) of the Russell 1000 is $500,934 billion, the Median Market Cap is $13,605 billion, and the Largest Stock by Market Cap is $2586.468 billion. Data was updated on April 30, 2022.
Index performance since 2017 is 21.69, 2028 drops to -4.78, 2019 goes up to 31.43, 2020 drops to 20.96, 2021 goes up to 26.45, and 2022 drops to -13.59.
Annualized risk – Standard Dev (%) Russell 1000:1 year 15.39, 3 years 18.92, 5 years 16.69, and 10 years 13.83.
Does Russell 2000 outperform S&P 500?
Citing from CME Group comparison between Russell 2000 vs S&P 500.
- 1979-1983: During this period the Small Cap 2000 success outperformed the S&P 500 by 80%. Investors considered at that time small companies were more agile than large companies in times of extreme economic turbulence.
- 1983-1990: The S&P 500 outperformed the Russell 2000 by 91%. Large companies rebounded by recovering from the previous period’s poor performance.
- 1990-1994: Russell 2000 outperformed the S&P 500 by 50%. During the 1990-91 recession, it appears that small firms performed better than large firms.
- 1994-1999: S7P 500 outperformed the Russell 2000 by 93% during the 1990-a expansion phase.
- 1999-2014: Russell 2000 outperformed the S&P 500 by 114%. During this period the world was hit by the wars in Afghanistan and Iraq, the subprime bubble, the economic crisis, and quantitative easing. Again small companies doing better than big companies.
- 2014-: S&P 500 outperforms Russell 2000 by 56%. In this period it seems that small companies are facing more difficulties due to the pandemic. Lockdown has disrupted the delivery of goods and services to small companies.
Does Russell 2000 include mid-cap?
The series index of the Russell 3000 apart from the Russell 2000 is the Russel 2500. This index is a list of mid-cap to small-cap company indexes from the bottom of the Russell 3000 index. This means the Russell 2000 index only consists of small-capitalization companies and does not include mid-capitalization companies.
Companies in the Russell 2000 list may be added to the Russell 2500 index list if the company has a capitalization in the mid-cap standard of the Russell 2500 index.
What does Russell 2000 measure?
In general, the Russell 2000 to measure companies with small capitalizations which is a sub-index of the Russell 3000. However, in its implementation, the Russell 2000 Dividend Index methodology is used, by dividing the Market Value of Dividends by Latest Index Divisor.
The corporate actions adjustment guide can be found here.
Is Russell 2000 A Good investment?
Russell 2000 is an index of the stock list of 2000 companies with small capitalization. However, if you make a calculation, of the results of all the small-cap companies, the results can exceed a company with large caps.
With the ETF, an investor does not have to buy all the shares of the 2000 companies. Russel 2000 can be a way to diversify capital in maintaining portfolio balance.
When referring to the comparison between Russell 2000, which represents small-cap companies, and the S&P 500, which represents 500 companies with large caps.
The performance of the Russell 2000 sometimes outperformed the S&P 500. However, sometimes the S&P 500 outperformed the Russel 2000. This means that this index is related to global conditions on the performance of the index. So that Russell 2000 can balance the portfolio when the index of large companies is dropping.
What is the best Russell 2000 ETF?
Some of the ETFs that track the Russell 2000 include:
- The iShares Russell 2000 ETF (IWM), issuer: Blackrock.
- Vanguard Russell 2000 ETF (VTWO) issuer: Vanguard.
- Daily Small Cap Bull 3x Shares (TNA) issuer: Direxion.
- Direxion Daily Small Cap Bear 3X Shares (TZA) issuer: Direxion
- ETRACS 2x Leveraged U.S. Size Factor TR ETN (IWML) issuer: UBS.
- ProShares UltraPro Short Russell2000 (SRTY) issuer: Proshares.
- #ProShares UltraPro Russell2000 (URTY) issuer ProShares.
- ProShares Short Russell2000 (RWM) issuer: ProShares.
- #ProShares UltraShort Russell2000 (TWM) issuer: ProShares.
- ProShares Ultra Russell2000 (UWM) issuer ProShares.
Referring to data from ETF.com the biggest equity is the iShares Russell 2000 ETF IWM with $53.06B in assets. Second Vanguard Russell 2000 ETF (VTWO) at $5.49B. All three Directors of Daily Small Cap Bull 3x Shares (TNA) with $1.16B.
What is the average annual return of the Russell 2000?
The following is the annual return of Russell 2000 or small-cap 2000 referring to the Wikipedia page:
- 1995 Price return 26.21%, total return 28.45%.
- 1996 Price return 14.76%, total return of 16.49%.
- 1997, price return 20.52%, total return 22.36%.
- 1998, the price return −was 3.45% total return –was 2.55%.
- 1999, price return 19.62%, total return 21.26%.
- 2000, price return −4.20%, total return –3.02%.
- 2001, price return 1.03%, total return 2.49%.
- 2002, price return −21.58%, total return –20.48%.
- 2003, price return 45.37%, total return 47.25%.
- 2004, price return 17.00%, total return 18.33%.
- 2005, price return 3.32%, total return 4.55%.
- 2006, price return 17.00%, total return 18.37%.
- 2007, price return −2.75%, total return –1.57%.
- 2008, price return −34.80%, total return –33.79%.
- 2009, price return 25.22%, total return 27.17%.
- 2010, price return 25.31%, total return 26.85%.
- 2011, price return −5.45%, total return –4.18%.
- 2012, price return 14.63%,total return 16.35%.
- 2013, price return 37.00%,total return 38.82%.
- 2014, price return was 3.53%, total return 4.89%.
- 2015, price return−5.71%, total return –4.41%.
- 2016, price return 19.48%, total return 21.31%.
- 2017, price return 13.14%, total return 14.65%.
- 2018, price return −12.18%, total return −11.01%.
- 2019, price return 23.72%, total return 25.52%
- 2020, price return 18.36%, total return 19.96%.
- 2021, price return 13.69%, total return 14.82%.
Conclusion
Small-cap 2000 or Russell 2000 is an index that is a sub-index of the Russell 3000. The Russell 3000 is an index of 3000 or more companies in the United States. Russell 2000 or known as Small cap 2000 is an index that has a small capitalization calculated from below than Russell 3000.
Russell 2000 to track the performance of small companies in the United States, which correlates to large companies in the S&P 500 index. Often the Small-cap 2000 outperforms the S&P 500 or vice versa.
During times of economic turbulence, the Russell 2000 outperformed the S&P 500. In times of industrial expansion, the S&P 500 often outperformed the Russel 2000.
Note: this article is for informational purposes only and does not constitute investment advice or solicitation. Forex, CFD, Crypto, and financial markets are at their own risk.
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