What is the Russell 2000 Index and why has it been booming over the past 6 months?

Does your portfolio include exposure to US small-caps?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are many indexes used by investors to track the performance of different markets and sectors. 

Here in Australia, the S&P/ASX 200 Index (ASX: XJO) acts as the benchmark for the Australian stock market. 

It represents the largest 200 companies by market capitalisation.

Additionally, other important indexes we often compare it to are the S&P 500 Index (SP: .INX) or the NASDAQ-100 Index (NASDAQ: NDX). 

Generally, these are used as benchmarks in the US. 

Many investors use ASX ETFs to track the returns of these markets. 

If you want to track the ASX 200 here in Australia, you could invest in the BetaShares Australia 200 ETF (ASX: A200) or the iShares Core S&P/ASX 200 ETF (ASX: IOZ). 

These are great options to add to your portfolio for instant diversification.

But there are many more indexes, focussed on not just the biggest companies in Australia or globally. 

One making headlines at the moment is the Russell 2000 RIC Capped Index. 

Two young boys with tennis racquets and wearing caps shake hands over a tennis ten on a tennie court.

Image source: Getty Images

What is the Russell 2000 index?

The Russell 2000 Index provides exposure to approximately 2,000 small-cap companies across various sectors. To clarify, these companies are almost all in the US. 

Ultimately, the benefit of tracking an index like this is having diversified access to early stage innovators.

This is because growth can be faster in early stage companies compared to blue-chip stocks.

In a report from Global X, Senior Investment Strategist Billy Leung explained how earnings growth can differ based on the size of a company. 

Large caps, particularly those dominating the S&P 500, are typically mature, globally exposed, and already operating at scale. Their earnings growth is often steadier, but materially harder to accelerate once expectations are high.

Boosted performance

It's been well documented that small-caps are enjoying a resurgence recently.

Here in Australia, ASX small-cap shares outperformed the larger players by almost 2.5 times last year, according to S&P Global data.

Looking to the US, Global X's recent report sheds light on how economic conditions are resembling previous periods of success for the Russell 2000 index. 

The Russell 2000 opportunity into 2026 is best understood as an earnings-led regime rather than a tactical rate-cut trade. History suggests that when relative earnings growth shifts decisively in favour of small caps, performance tends to follow, even without multiple expansion or aggressive margin recovery assumptions.

How to gain exposure

One option for investors looking to gain exposure to this index, or more generally, US small-cap stocks, is the The Global X Russell 2000 ETF (ASX: RSSL). 

It aims to track the performance of the Russell 2000 index. 

Ultimately, it enables investors to capture high-growth opportunities in early-stage companies and it is already catching economic tailwinds. 

Just yesterday, the fund rose an impressive 3%.

Furthermore, in the last 6 months, it's up more than 12%.

Comparatively, this has outpaced both the ASX 200 and S&P 500 over this period.

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Exchange-Traded Funds (ETFs)

Man working with his colleague with a hologram of a world map.
Exchange-Traded Funds (ETFs)

This ASX ETF has beaten the market over the last 10 years

This fund is set up for long-term success.

Read more »

A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.
Exchange-Traded Funds (ETFs)

Which ASX ETFs could be top picks for beginner investors?

Starting your journey? Here are some ETFs that could help.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Exchange-Traded Funds (ETFs)

3 very exciting ASX ETFs for investors to watch

Let's see why these funds should be on your watchlist.

Read more »

ETF written in white on a multi coloured background.
Exchange-Traded Funds (ETFs)

These ASX ETFs are generating big momentum in the second half of 2026

These are some of the hottest funds right now.

Read more »

Happy woman looking at her phone, with buildings in the background.
Exchange-Traded Funds (ETFs)

Why I'd buy these Betashares ETFs in September

For fresh money this September, I like the different opportunities these three ETFs provide across global and Australian markets.

Read more »

ETF on white blocks with a rising arrow on top of coin piles.
Exchange-Traded Funds (ETFs)

How much must I invest in VAS ETF shares to earn a $1,000 passive income in 2027?

The VAS ETF could be an appealing option for dividends.

Read more »

ETF written in light blue on a chart.
Exchange-Traded Funds (ETFs)

3 of the best ASX ETFs to buy and hold for 10 years

Let's see why these funds could be worth buying and holding for the next decade.

Read more »

Silver metallic dice showing the alphabets ETF and an up and down arrow on backgrounds of stock charts.
Exchange-Traded Funds (ETFs)

Are these top Vanguard ETFs still a buy in September?

VAS and VGS offer diversification and simplicity for long-term investors.

Read more »