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๐ฑ Russell 2000: keep your options openโ
๐ Russell 2000 (the US Small Cap 2000) reflects the performance of shares of publicly traded small-cap companies registered in the US and focused on the domestic market. Index focuses on ยซsmallยป US firms, accounting for about 10% of the market capitalization.
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As of January 31, 2021, the average market value of Russell 2000 list members was $ 922 million. Among companies that are the leaders in growth of index are startups in the field of medicine, food and consumer goods. Russell 2000 is calculated similarly to S&P500.
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Recall that S&P500 tracks the ยซmonstersยป of the market, and US Small Cap 2000 are used by investors who prefer shares of small but promising companies. A large number of shares in the index provides broad portfolio diversification.
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Overall dynamics of the S&P500 and Russell 2000 are almost the same, but short-term volatility is rarely synchronous. Russell 2000 ยซrunsยป more actively, as small companies have limited financial resources and are less prepared for negative changes in the economy as a whole. But it is small companies that can be drivers of job growth, which is why US Small Cap 2000 is always taken into account in the forecast of key economic indicators such as NFP.
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Most often, Russell 2000 assets are used for medium-term investment, but the index can also be used for short-term trading (ETFs, futures, options, CFDs). This is a good option for novice investors who have no experience in multivariate stock market analysis. The most popular ETF for the Russell 2000 remains the iShares Russell 2000 ETF (IWM).
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Profits to yโall!