The Russell 2000 Index tracks the 2,000 smallest stocks (or companies) out of the 3,000 stocks in the Russell 3000 Index

The threat of recession, or even a significant economic slowdown alongside persistent decades high inflation, could prove to be a challenging investment environment, especially for investors in small cap companies and stocks.

The Russell 2000 has outperformed and has offered the strongest performance in all indexes both month-to-date and quarter-to-date according to WisdomTree data. The Russell 2000 Index is one of the most commonly watched indexes among investors, and it’s considered a benchmark for how smaller capitalized US companies are doing.

The Russell 2000 is a stock index that tracks the performance of 2,000 small-capitalization companies and often serves as a measure of the underlying health of the US economy.

It is comprised of the smallest companies included in the broader Russell 3000 Index, and is one of the most widely used benchmarks for funds that invest in small-cap stocks.

“Small-capitalization stocks tend to be more economically-sensitive and cyclical than large-capitalization stocks,” says Ari Wald, a technical analyst at Oppenheimer. “That is, they both rise and fall by a greater magnitude through the ups-and-downs of an economic cycle.”

The Russell 2000 represents around 97% of the investable US equity market. The Russell 2000 serves as a benchmark for small-cap funds and a barometer for the overall health of the US economy.

Note: It’s important to always keep in mind that owning a stock means buying a percentage of ownership in the company. In short, when you buy a stock, you’re buying a fraction of a company, and that fraction may pay dividends and provide you voting right privileges.

Stocks are a way to build wealth.

References:

1. https://www.businessinsider.com/personal-finance/russell-2000-index
2. https://www.cnbc.com/2018/04/03/when-you-buy-stock-heres-what-you-actually-own.html