FTSE Russell Insights

Russell 2000: The original small-cap benchmark evolves for a new era

Catherine Yoshimoto

Director, Product Management, Benchmark Product Development

When the Russell 2000® index was launched in 1984, it broke new ground as the first benchmark dedicated to small-cap stocks. For institutional investors, this was a game-changer—providing a way to measure a different segment of the US equity market beyond large caps. Fast forward to today, and the impact is undeniable: $11.8 trillion in assets were benchmarked to Russell US Indexes as of the end of 2024 (of which approximately 15% is benchmarked specifically to the Russell 2000 Index).

A robust ecosystem supporting liquidity

The Russell 2000 isn’t just a benchmark—it’s the foundation of a thriving ecosystem. Index-linked products such as options and futures have long supported liquidity, and in recent years, we’ve seen the rise of covered-call "BuyWrite" indexes that incorporate options to generate additional income while tracking the Russell 2000, further expanding its utility for investors.

You can see the breadth of index-linked products tracking a Russell index on our website (Index Linked Products | LSEG) as well as additional index methodologies that can be applied to a Russell index (Russell US Indexes Ecosystem).  

Transparent, rules-based construction

Russell US Indexes are built on a transparent, rules-based methodology, ensuring consistency and objectivity in stock inclusion. The process includes:

  • Regular reconstitution (with a move from annual to semi-annual frequency starting in 2026 [Note 1])
  • Quarterly IPO additions
  • Clear inclusion and exclusion criteria for companies

What’s changing in 2026?

Beginning in June 2026, Russell US Indexes—including the Russell 2000—will shift from a single annual reconstitution in June to semi-annual reconstitutions in June and December. Why? Markets move faster than ever, and this change reduces turnover at the June reconstitution while improving responsiveness to market dynamics.

Russell US Indexes are regularly and proactively maintained to reflect the true US opportunity set

Why small caps, why now?

The potential investment advantages of small-cap stocks have been well documented, whether in Fama’s and French’s 1993 research paper on the “size” factor or via decades of performance data. While recent years have seen US large-cap stocks dominate returns, 2025 may have marked a turning point (see Why it’s time to revisit the Russell 2000® | LSEG). Lower interest rates and a shifting macroeconomic backdrop have renewed focus on small caps, which offer:

  • Exposure to emerging companies and IPOs—potential future large-cap leaders
  • Strong domestic orientation, reflecting the US economy
  • Performance resilience in recoveries

In 2025, the Russell 2000 index exceeded its previous high, achieved in November 2021 during the post-COVID market recovery phase. The Russell 2000 Index price levels closed at fresh record highs above 2600 in early January 2026.

Russell 2000 Index Daily Price Levels

The Russell 2000 advantage

  • Broad Representation: 2,000 small-cap US stocks, enabling full portfolio construction and style-based investing.
  • Diversification: Complements large-cap exposure for balanced US equity strategies.
  • Trusted Benchmark: Recognized globally, with $11.8 trillion benchmarked to Russell US Indexes and supported by a deep product ecosystem.

Looking ahead

As markets evolve, so does the Russell 2000. With semi-annual reconstitution starting in 2026, the index remains committed to transparency, relevance, and investor needs—continuing its role as the trusted benchmark for US small-cap performance.

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