The Russell 2000 index is a stock market index that tracks the performance of small-cap stocks in the United States. It is a subset of the Russell 3000 index, which includes the 3000 largest publicly traded companies in the US.
Small-cap stocks are generally defined as companies with a market capitalization between $300 million and $2 billion. These companies are often younger, more dynamic, and more volatile than their larger counterparts, and they are considered to be riskier investments.
The Russell 2000 index is calculated using a market capitalization-weighted method, which means that the weight of each stock in the index is based on its market capitalization. The larger the market capitalization of a company, the more weight it carries in the index.
The Russell 2000 index is rebalanced annually in June, and companies that no longer meet the small-cap criteria are removed from the index, while new companies that meet the criteria are added.
The Russell 2000 index is used as a benchmark for the performance of small-cap stocks in the US. It is widely followed by investors, financial professionals, and policymakers as an indicator of the health of the US economy. The index is also used as the basis for a number of financial products, including exchange-traded funds (ETFs) and mutual funds.
Investors who are interested in gaining exposure to small-cap stocks in the US can do so through ETFs and mutual funds that track the Russell 2000 index. These products allow investors to gain exposure to a diversified portfolio of small-cap stocks without having to buy individual stocks.
In conclusion, the Russell 2000 index tracks the performance of small-cap stocks in the United States. It is widely followed as a benchmark for the performance of the US economy and is used as the basis for a number of financial products. Investors can gain exposure to small-cap stocks in the US through ETFs and mutual funds that track the index.