What does the Russell 2000 index measure?

The Russell 2000 index measures the performance of 2,000 stocks representing small U.S. companies, making it a critical benchmark for small-cap stocks. This index is often used by investors to gauge the performance of the smaller segment of the U.S. equity market, distinguishing it from indices that track larger companies.

The Russell 2000 is a subset of the Russell 3000 index, which includes the 3,000 largest publicly traded companies in the U.S. The index is widely regarded as a reliable indicator of the health and performance of the small-cap sector, as it encompasses a diverse range of industries and reflects the economic dynamics of smaller firms. Given its focus, it provides insights into the broader economy and is often used by fund managers and investors looking to invest in growth potential that smaller companies may offer.

In contrast, other options reflect different indices or market segments, such as the largest U.S. companies or specific sectors like technology or international markets, which are not relevant to the Russell 2000 index.