Five things about the Russell 2000 Index

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Best Russell 2000 Stocks 2021: The Russell 2000 index is the go-to index for Indian investors wishing to invest in small-cap stocks available on the US stock market. Small-cap shares also had a fantastic run over the past 12 months, despite not receiving the same amount of attention as FAANG companies and Nasdaq-dominant firms. Over a year, the Russell 2000 index has increased by almost 100%. The Russell 2000 Index is for you if you want to cash in on small-cap company gains in a major way.

A stock market index that gauges the performance of the 2,000 smaller businesses that make up the Russell 3000 Index is known as the Russell 2000 Index. Because of its emphasis on smaller businesses that target the U.S. market, the Russell 2000, which is administered by London’s FTSE Russell Group, is frequently referred to as a leading indicator of the American economy.
A lot of investors compare the performance of small-cap mutual funds to the index’s movement since it is thought to be a better indicator of opportunities across the board than narrower indices, which may have biases or more stock-specific hazards that might affect performance.

What is Russell 2000 index

The small-cap equities listed on the US stock market are principally represented by the Russell 2000, which is a component of the Russell US Indexes. It serves as a gauge of the small-cap sector’s performance on the US stock market. Nearly 2000 of the smallest companies are included in the Russell 2000 index, as determined by their market capitalization and current index participation. Based on a combination of their market cap and current index membership, it contains about 2,000 of the smallest securities. For looking for an index to use when investing in lesser-known small-cap firms, Russell 2000 is one option. The small-cap sector of the US equities market is tracked by the Russell 2000 Index.

Part of Russell US Indexes

A subset of the Russell 3000 Index, the Russell 2000 Index accounts for almost 10% of the Russell 3000 Index’s overall market capitalization. The small-cap equities listed on the US stock market are principally represented by the Russell 2000, which is a component of the Russell US Indexes. Large-cap companies are represented by the Russell 1000 Index, which combined with the Russell 2000 Index makes up the Russell 3000 Index. A component of the Russell 3000 Index, the Russell 2000 Index accounts for around 10% of the index’s overall market capitalization.

Russell 2000 index levels

To prevent larger stocks from impairing the performance and traits of the Russell 2000’s real small-cap nature, the index is recreated every year.
The Russell 2000’s price as of April 6, 2021, was 2259.15
52-week period includes: 1,133.55 – 2,360.17

Performance

The Russell 2000 has increased by roughly 14.40% so far in 2021, compared to gains of 8.46% for the S&P 500 and 5.36% for the Nasdaq 100. Gamestop Corp, Digital Turbine, Silvergate Capital Corp Cl A, Five Prime Thera, At Home Group Inc, Sm Energy Company, Overstock.com Inc, Pacific Biosciences, Exp Realty International, and Novavax Inc. are a few Russell 2000 stocks that have earned above 1,000% in a 12-month period.

Top ten index stocks, industries

Plug Power, Penn National Gaming, Novavax, Caesars Entertainment, Lithia Motors, Sunrun, Darling Ingredients, Deckers Outdoor Corp., Ultragenyx Pharma, and Builders Firstsource Inc. were the top ten Russell 2000 companies as of February 28, 2021. Health Care, Consumer Discretionary, Industrial, Financials, and Technology make up the top 5 sectors of the index.

Things to do

Keep a minimal exposure to small-cap stocks in your portfolio if you want to invest in them. Some of the shares can be made up of speculative and operator-driven equities with unmanageable levels of volatility. Before investing in small-cap companies, one should keep in mind that their volatility may be higher than that of large-cap stocks. Due to their growing stage and overall lack of study, small-cap stocks are riskier than large-cap stocks. They are only recognised by the market and receive higher valuations once they reach a certain size. However, some of these firms are experiencing rapid development, so a thorough stock selection is soon to come. Keep in mind that small-cap companies shouldn’t make up the majority of your portfolio before deciding to invest in them.

Disclaimer: The choice to invest in any stock should be made independently after thoroughly analysing the company’s operations and other fundamentals, or after contacting a financial professional. It does not constitute advice to purchase, hold, or dispose of any of the stocks. Their investment advice is not under the control of Financial Express Online.

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