The Russell 2000 Index is a market-capitalization-weighted index of small U.S. companies maintained by the index provider FTSE Russell. It is a subset of the Russell 3000 Index, the 3,000 largest U.S. companies, and consists of those ranked from about 1,001 to 3,000 by total market capitalization; the largest 1,000 make up the Russell 1000. FTSE Russell describes it as including "approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership." It is commonly called simply the Russell 2000. Because its rules sort companies mechanically by size, it serves as the standard yardstick for how small-company U.S. stocks are doing.
Russell 2000 Index
The Russell 2000 Index is a stock index of roughly 2,000 small U.S. companies, published by FTSE Russell, and a widely used benchmark for small-company stocks in the United States.
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Quick Summary
- The index holds the companies ranked roughly 1,001st to 3,000th by market value in FTSE Russell's broad U.S. universe, the small-company slice of the Russell 3000.
- Membership is set by published rules, not by a committee, and is rebuilt every June and December.
- Companies are weighted by the value of the shares actually available to trade, so larger members count for more.
- A band around the size cutoff keeps companies from switching in and out with small price moves, so the count is approximately 2,000, not exactly.
- Investors own it through index funds and exchange-traded funds that track it, since the index itself cannot be bought.
Definition
Advanced Explanation
How membership is decided. On each rank day, FTSE Russell ranks every eligible U.S. company by total market capitalization. Under its construction rules, "the largest 4,000 securities become members of the Russell 3000E Index," and the other indexes are cut from that list: the Russell 1000 takes companies 1 to 1,000, the Russell 2000 takes 1,001 to 3,000, and the Russell Microcap takes 2,001 to 4,000. Unlike the S&P 500, whose members are chosen by a committee, the Russell indexes are built by rule; the methodology describes them as "objectively constructed and based on transparent rules."
Why the count is not exactly 2,000. To avoid needless turnover, the rules place a band around the breakpoint between the Russell 1000 and the Russell 2000. An existing member whose market value is near the cutoff stays where it is unless its size has changed materially, so a company ranked a little inside the top 1,000 can stay in the Russell 2000, and one ranked a little outside it can stay in the Russell 1000. Between rebuilds, under the methodology's "no replacement" rule, companies that leave the index through mergers, acquisitions or similar events "are not replaced," so the count drifts during the year. That is why FTSE Russell describes the membership as approximately 2,000.
Ranking by size, weighting by float. Companies are ranked by total market capitalization but weighted by float-adjusted capitalization, which counts only the shares available to public investors. FTSE Russell states that it "provides float-adjusted, market capitalization-weighted indexes." A company whose founders or a parent company hold a large block of shares therefore carries less weight than its full market value would suggest.
The schedule. Reconstitution, the full rebuild of the index, "occurs on the fourth Friday in June and the second Friday in December" under the current methodology, and eligible new listings are added each quarter. The December rebuild returned in 2026: FTSE Russell announced that the reconstitution on December 11, 2026 would be the second of the year, "completing the index family's return to a semi-annual schedule." Older materials describing a once-a-year June rebuild are out of date.
What owning it means. A fund tracking the Russell 2000 holds a broad spread of smaller companies across many sectors. Smaller businesses tend to carry structural risks larger ones do not, such as narrower access to capital and thinner trading in their shares, and the index excludes the largest U.S. companies entirely, so it is a complement to a large-company or total-market holding rather than a substitute for one. What counts as a small-cap stock is a convention, and other index providers draw the small-cap line differently.
How to Remember
The Russell 3000 is the whole U.S. market by size; take away the biggest 1,000 and the remaining 2,000 or so are the Russell 2000.
Used in a Sentence
“Marisol's large-company fund had kept pace with the S&P 500 all year, but the Russell 2000 had lagged it badly, so her small-cap fund was the drag on her portfolio.”
How It Works
On rank day the eligible companies are sorted by total market value, the breakpoints between the size indexes are set, existing members near a breakpoint are checked against the band, and the new list takes effect after the close on reconstitution day. Each member's weight is its float-adjusted market value divided by the float-adjusted total of all members.
For example, with simplified figures: Company A has a total market value of $4 billion, but a founding family holds 25% of the shares, so its float-adjusted value is $3 billion. Company B has a total market value of $3 billion, all of it freely traded. Both are ranked by total value, so A ranks higher, but in the index they carry the same weight, because each contributes $3 billion of float-adjusted value. A fund tracking the index would put the same number of dollars into each.
Pros and Cons
Pros
- A transparent, rules-based benchmark for U.S. small-company stocks.
- Broad: about 2,000 companies across sectors, so no single small company dominates.
- Widely tracked, so low-cost index funds and exchange-traded funds are available.
Cons
- Small companies carry risks large ones do not, and the index can trail large-company indexes for long periods, with no promise that the gap reverses.
- Funds tracking it generally trade around the published reconstitution dates, which concentrates heavy trading around those days.
- It is one provider's definition of small-cap, so it does not match other small-cap indexes.
People Also Asked
Answers to the most frequently asked questions.
What is the Russell 2000 Index?
It is FTSE Russell's index of about 2,000 small U.S. companies, those ranked roughly 1,001st to 3,000th by market value in the Russell 3000. It is a widely cited measure of how small-company U.S. stocks are performing.
How often does the Russell 2000 change?
The index is fully rebuilt twice a year, on the fourth Friday in June and the second Friday in December, and new public companies can be added each quarter. FTSE Russell returned to the twice-yearly schedule in 2026, with its first December reconstitution in more than three decades.
What is the difference between the Russell 2000 and the S&P 500?
The S&P 500 covers 500 large U.S. companies chosen by an index committee, while the Russell 2000 covers about 2,000 smaller companies selected by a size ranking. They hold largely different companies and can perform very differently in the same year.
Can you invest directly in the Russell 2000?
Not in the index itself, which is a calculation rather than a security. Investors gain exposure through index mutual funds and exchange-traded funds that try to track it, each with its own expense ratio and tracking difference.
Sources
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- FTSE Russell. "Russell US Equity Indexes: Construction and Methodology." v7.2, August 2026.
- FTSE Russell. "Russell 2000 Index." Solution overview, 2022.
- FTSE Russell. "FTSE Russell announces December 2026 Russell US Indexes Reconstitution schedule." Press release, 2026.
- U.S. Securities and Exchange Commission. "Market Index." Investor.gov glossary.
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