What is the Russell 2000? | The Russell 2000 Explained



What is the Russell 2000? | The Russell 2000 Explained

In this video from Titan's Emily Bice, Emily explains everything related to the Russell 2000 index, made up from 2000 small-cap publicly-traded companies.

Video Transcript

The Russell 2000 is a roster of 2000 of the smallest U.S. stocks ranked by market capitalization, that is a company's stock price multiplied by the number of shares outstanding. The company that oversees the index, the London Stock Exchange's FTSE Russell subsidiary recalculates the index each June removing some companies and adding others using a rules based methodology. At the time of this recording, some of the biggest companies by market cap in the Russell 2000 include Ovintiv an oil and gas producer, AMC Entertainment, a well-known movie theater chain, Synaptics, a semiconductor maker, and Performance Food Group, a food services distributor.

You'll notice that the Russell 2000 lacks the popular blue chip names found in the S&P 500 like Google and Apple simply because those companies are too big to be included. However, people find the Russell 2000 enticing for just that reason, believing that small cap stocks have larger growth potential and upside than more commonly held names. How do you invest in it? You can't invest directly in the Russell 2000 or any other index because the indexes themselves aren't companies with publicly traded shares. You can, however, buy shares of stocks listed in the Russell 2000 or purchase shares of an index fund that mirrors the performance of the Russell 2000. I'll leave you with this interesting fact: the Russell 2000 is named after a Russell. Frank Russell, that is, whose company launched the index in 1984. 

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