Insights | The Russell 2000 Index: Small cap performance in a slow-growth economic environment

Key points:

  • A wide body of research has shown that small cap stocks can help enhance portfolio diversi cation and can increase potential long-term returns.
  • Small cap stocks, as measured by the Russell 2000® Index, have historically tended to perform higher than large cap stocks, as measured by the Russell 1000® Index, in environments of slower economic growth.
  • Securities lending programs, based on highly liquid products replicating the small cap indexes, such as exchange-traded funds (ETFs) or the individual stocks within the index, may offer market participants an additional lending yield.

The potential long-term bene ts of including small cap stocks as part of a diversi ed, multi-asset portfolio have been well documented by numerous academic researchers and industry practitioners. A wide body of research has shown that small cap stocks have distinct risk/return characteristics that can increase portfolio diversi cation and can boost potential returns over time.

The comprehensive and objective design of the Russell 2000 Index has made it institutional market participants’ benchmark of choice for measuring the US small

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Supporting documents

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