FTSE Russell

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

Read the complete white paper at the link beneath Related Files

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What’s new

  • Why climate change also matters for government bond investing

    Why climate change also matters for government bond investing

    White papersMon, 11 Nov 2019

    The global sovereign debt market is one of the largest asset classes in the world, and yet it has typically lagged other asset classes when it comes to integrating climate change considerations.

  •  No place like home: sizing up investment home bias in pension fund allocations

    Blog | No place like home: sizing up investment home bias in pension fund allocations

    White papersThu, 24 Oct 2019

    One would not expect that returns from equity investment by some of the world’s most highly-sophisticated institutional investors would be unduly domestically-focused, to the detriment of returns, but research from FTSE Russll suggests exactly that.

  • bond yields, zombies and unintended consequences

    Blog | Trapped near zero: bond yields, zombies and unintended consequences

    White papersThu, 24 Oct 2019

    When Japanese interest rates first fell towards zero, the Japanese government yield curve steepened sharply as it was assumed temporary, and that interest rates and bond yields would rapidly “normalise” or mean revert at levels more typical of the 1980s and ’90s. With about a 20-year lag, the Eurozone now appears to be experiencing the same phenomenon, and has met similar policy responses.

  • Canada, climate change & fixed income markets

    Blog | Canada, climate change & fixed income markets

    White papersThu, 24 Oct 2019

    A new FTSE Russell index measuring the impact of climate change on global fixed income markets is revealing how Canada ranks compared to other developed nations on climate readiness and provides insight into the biggest climate-related risks facing Canadian investors.

  • Appraising home bias exposure

    Appraising home bias exposure

    White papersTue, 22 Oct 2019

    Studies have shown that pension funds have inherent biases to their domestic markets within their equity allocations. In this paper, FTSE Russell seeks to understand the impact of home bias in the equity allocations of five large pension fund markets—the US, UK, Japan, Canada, and Australia—by examining the extent of their home biases and analyzing their effects over a 12-year period.

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