Russell 2000 Index Vs S&P 500 Chart
The Russell 2000 Index and the S&P 500 are two of the most popular stock market indices in the United States. While both indices are used by investors as benchmarks for the overall health of the US stock market, they differ in several key ways. In this article, we'll take a closer look at the Russell 2000 Index vs S&P 500 chart, and explore some of the similarities and differences between these two indices.
What is the Russell 2000 Index?
The Russell 2000 Index, also known as the Russell 2000, is a stock market index that tracks the performance of approximately 2,000 small-cap companies in the United States. Small-cap companies are generally defined as those with a market capitalization between $300 million and $2 billion. The Russell 2000 is considered a leading indicator of the health of the US economy, as small-cap companies are often seen as more sensitive to economic fluctuations than larger companies.
What is the S&P 500 Index?
The S&P 500 Index, also known as the Standard & Poor's 500 Index, is a stock market index that tracks the performance of 500 large-cap companies in the United States. Large-cap companies are generally defined as those with a market capitalization of $10 billion or more. The S&P 500 is considered one of the most important stock market indices in the world, as it represents approximately 80% of the total market capitalization of the US stock market.
Key Differences Between the Russell 2000 and S&P 500
One of the key differences between the Russell 2000 and S&P 500 is the size of the companies included in each index. The Russell 2000 tracks small-cap companies, while the S&P 500 tracks large-cap companies. This means that the Russell 2000 is generally considered a better indicator of the health of small businesses, while the S&P 500 is considered a better indicator of the health of large corporations.
Another key difference between the two indices is their performance. While both indices have historically provided strong returns for investors, the Russell 2000 has tended to outperform the S&P 500 over the long-term. This is because small-cap companies are often able to grow at a faster rate than larger companies, which can lead to higher returns for investors.
Which Index is Right for You?
Deciding which index to invest in ultimately depends on your investment goals and risk tolerance. If you're looking for a more diversified portfolio that includes exposure to both large and small-cap companies, investing in both the Russell 2000 and S&P 500 may be a good option. However, if you're looking for higher returns and are willing to take on more risk, investing solely in the Russell 2000 may be a better choice.
Conclusion
Both the Russell 2000 Index and the S&P 500 Index are important benchmarks for the overall health of the US stock market. While they differ in several key ways, both indices have historically provided strong returns for investors. Ultimately, the decision of which index to invest in depends on your investment goals and risk tolerance.