Year-to-date 14 July 2026.
Russell 2000 | Nasdaq | S&P500
US markets have had a good year with the tech heavy Nasdaq up just over 17% so far in 2026 while the S&P500 is just over 10% higher. Both are excellent numbers for just over half way through the year. Heck they’d be perfectly fine numbers for the full year. We could shut up shop and all go home till 2027.
But we won’t and importantly there is another actual winner in US markets. The ‘small’ cap Russell 2000 index almost 20% up so far in 2026. This is the best start to the year for the Russell 2000 index since 199, and it trades at all-time highs.
Is it really a small cap index?
The answer is yes. The medium market cap is around $1billion. The largest stocks are around $10billion while the smallest is just under $150million. The methodology is they take the 2,000 stocks from the 1,001 sized stock to the 3,000 in size.
So yes small, albeit this is relative. A $10billion stock on the JSE would be in the Top40 at about the size of Shoprite.
The index is balanced twice a year at year end and mid-year.
What’s the investment thesis?
Small caps have lagged their larger cap stocks for what feels like forever. Thus the valuation gap is wider than it has been in potentially decades. There is also a lot less concentration compared to the S&P500 where ±40% of the index is in ten stocks.
The small cap index is also very light on tech which makes it a great counter point to the larger tech heavy indices.
Russell 2000 Top 5 Sectors | July 2026
How do we buy it?
There are a number of US listed ETFs as detailed below. Your best option is the Vanguard Russell 2000 (VTWO, TER 0.06%). But there are a number of vanilla offerings as well as some that may be even better as they filter for value or growth.
Over the longer-term value has won out and I suspect that exactly because of the structure of the index. Smaller stocks that have lagged the market offering value. The big growth stories will quick enough move up and out of the index.
Russell 2000 (Standard, Growth & Value) | Weekly to close 14 July 2026
Below are the more popular Russell 2000 ETF options from the two major ETF issuers in the US.
| Ticker | Fund | Issuer | TER | AUM | Holdings | Benchmark |
|---|---|---|---|---|---|---|
| IWM | iShares Russell 2000 | BlackRock | 0.19% | ~$83.3bn | ~1,985 | Russell 2000 |
| VTWO | Vanguard Russell 2000 | Vanguard | 0.06% | ~$17.5bn | ~1,970 | Russell 2000 |
| IWN | iShares Russell 2000 Value | BlackRock | 0.24% | ~$14.3bn | ~1,400 | Russell 2000 Value |
| IWO | iShares Russell 2000 Growth | BlackRock | 0.24% | ~$15.1bn | ~1,120 | Russell 2000 Growth |
| VTWV | Vanguard Russell 2000 Value | Vanguard | 0.06% | ~$1.3bn | ~1,440 | Russell 2000 Value |
| VTWG | Vanguard Russell 2000 Growth | Vanguard | 0.06% | ~$1.7bn | ~1,130 | Russell 2000 Growth |
There are of course a bunch of other small cap indices in the US. S&P has the S&P SmallCap 600 while the MSCI also have a number of them. The S&P SmallCap 600 is interesting as it has a quality filter. To be included stocks need to meet size requires, but also it must have positive GAAP earnings on two tests simultaneously. The sum of its most recent four consecutive quarters of as-reported net income must be positive, and the most recent single quarter must also be positive. I’ll write more on that another day.
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ETF blog
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.
