Many popular stock market indexes—like the S&P 500® and the Nasdaq Composite—track large, relatively well-known companies. But there are plenty of publicly traded companies that aren’t (yet) household names. The Russell 2000 is an index, or a group of investments that share traits, that focuses on these smaller companies. Here’s why the Russell 2000 is an important index, which companies it tracks, and how you could potentially invest in the companies in this index.
What is the Russell 2000?
The Russell 2000 is a stock market index that tracks the value of approximately 2,000 US stocks with a small market capitalization. Market capitalization is a way of expressing a company’s total value, and it’s found by multiplying the number of outstanding shares by the share price. As small-cap stocks, companies in the Russell 2000 have a relatively low total value in comparison to mid- and large-cap companies. The Russell 2000 summarizes the average performance of all its stocks in just one number.
That way, investors can get a snapshot of what’s going on with small, publicly traded companies without checking the price of each stock individually.
FTSE Russell runs the Russell 2000. FTSE stands for the Financial Times Stock Exchange. This group is a subsidiary of the London Stock Exchange Group and provides additional market benchmarks along with analytics about these indexes.
How does the Russell 2000 work?
The Russell 2000 is based on the Russell 3000, another market index tracking the value of approximately 3,000 large-cap, mid-cap, and small-cap US stocks. The Russell 2000 only follows about 2,000 of the smallest companies on the Russell 3000.
The Russell 2000 index calculation is not a simple average, where each company’s stock price has the same impact. Rather, the Russell 2000 is a market capitalization‒weighted index. That means changes to the stock price of the larger, more valuable companies on the Russell 2000 have a bigger impact on the index than changes to smaller, less valuable companies.
Russell 2000 vs. other major indexes
Here’s how the Russell 2000 compares to other well-known US stock market indexes.
Russell 2000 vs. S&P 500
The S&P 500 is one of the best-known market indexes. It tracks the performance of about 500 of the largest companies in the US. While the lowest-value companies on the S&P 500 are worth about $20 billion, the median market cap of a company on the Russell 2000 is less than $1 billion as of June 2025.1 While the Russell 2000 uses standard market capitalization‒weighting, the S&P 500 uses free-float market capitalization‒weighting. That’s when certain shares, namely non-trading shares owned by institutional investors, government agencies, and company executives and founders, are subtracted from the total outstanding shares. Larger, more-established companies historically tend to be associated with lower risk of large losses, but their growth potential and chance for high gains may be lower than small-cap stocks. Plus, the Russell 2000 is more tied to the US economy than the S&P 500, since small-cap companies often earn mostly in the US, while S&P 500 companies tend to have global reach, earning worldwide.
Russell 2000 vs. Nasdaq
When people mention the Nasdaq, they often are referring to the Nasdaq Composite Index, which tracks the value of about 3,000 stocks exclusively listed on the Nasdaq stock exchange. While the Nasdaq Composite includes both small companies and massive ones, the Russell 2000 tracks only small companies. Plus, the Nasdaq is heavy on tech stocks including the Magnificent 7, whereas the Russell 2000 has a more balanced mix of industries.
Russell 2000 vs. DJIA
The Dow Jones Industrial Average (DJIA), aka the Dow, is another famous stock market index focused on large companies. This index only includes 30 stocks with leading companies across several industries, like Apple for technology, Johnson & Johnson for pharmaceuticals, and McDonald’s for food services.
Rather than being a market capitalization‒weighted index like the Russell 2000 and the other major indexes mentioned earlier, the DJIA is a price-weighted index. That means companies with a higher share price have a bigger influence on the DJIA; in the Russell 2000, companies with a higher market capitalization affect the value more.
Stock market index comparison chart
| Dow Jones Industrial Average | Nasdaq | Russell 2000 | S&P 500 | |
| Number of stocks | 30 | More than 3,000 | About 2,000 | About 500 |
| Size of companies | Large-cap industry leaders | Small- and large-cap | Small-cap | Large-cap |
| Industries covered | Various | Mostly tech | Various | Various |
| Weighting | Price-weighted | Market capitalization‒weighted | Market capitalization‒weighted | Free-float market capitalization‒weighted |
What companies are in the Russell 2000?
The Russell 2000 includes approximately 2,000 of the smallest companies on the Russell 3000. These companies are spread across industries and range in size. Among the more well-known, multi-billion-dollar companies are Abercrombie & Fitch, Avis, and Texas Roadhouse.
Every year, FTSE Russell analysts review their indexes to see how listed companies’ market capitalizations have changed. That can lead to decisions to add and/or remove stocks to finalize what the Russell 2000 index will track. For example, if a company grows in value so it is no longer one of the approximately 2,000 smallest stocks on the Russell 3000, it would be removed from the Russell 2000.
Why is the Russell 2000 important?
When it launched in 1984, the Russell 2000 was one of the first market indexes devoted to small-cap stocks. With about 2,000 companies on the index spread across many industries, the Russell 2000 could also give a clue about how the US economy is doing.
Still today, it’s arguably the most famous market index for US small-cap stocks, which some investors like to track for their growth potential. It’s also helpful for small-cap stock investors who can buy shares of funds that track the Russell 2000’s performance.
Historical performance of the Russell 2000
From June 2015 through June 2025, the Russell 2000 has posted an average annual return of 7.1%.2 This small-cap index has not done as well as indexes that track larger companies, such as the S&P 500 and the Dow, which delivered average annual returns of 13.6%3 and 12.1%,4 respectively, for the same time period. But there have been times when the Russell 2000 has outpaced these large-cap indexes.
How to invest in the Russell 2000 companies
While you can’t invest directly in an index like the Russell 2000, there are ways to invest in the companies that make up the index. If you’re interested in those investments, you could follow these steps.
1. Pick a financial institution
If you don’t already have an account with a brokerage firm, these 5 questions could help you choose a broker.
2. Open an investment account if you don’t yet have one
You need an account, like a taxable brokerage account or a tax-advantaged retirement account, to invest. Read up on your choices to find the right one for you. Here’s how to open a brokerage account.
3. Choose how you’d like to invest
You have a few options for investing in the companies that make up the Russell 2000.
- A common choice is buying shares of an index fund. These funds, often exchange-traded funds (ETFs) which trade throughout the day when markets are open, are managed by professionals who aim to build a portfolio that is designed to match the performance of the index. If they’re successful, you could get virtually the same return from that fund without having to buy all 2,000-ish stocks on the Russell 2000. Some index funds charge fees, known as expense ratios, for managing the fund.
- If you don’t want a preassembled basket of stocks like an index fund, you could instead seek out a direct indexing provider. They’ll buy each individual stock for you so you directly own shares of those companies rather than shares of a fund that tracks those companies. This tends to come with a management fee.
- A third option is to buy individual stocks yourself in amounts equal to their weighting in the Russell 2000. Because it’s relatively affordable to invest in a Russell 2000 index fund, you may decide not to go this DIY route because of the high degree of effort involved to build and maintain this portfolio yourself.