This morning the Russell 2000 small cap index broke above 1000 points for the first time ever.
I took a look at the Russell data to get a better sense of where it’s been and what it’s composed of and came up with a few interesting datapoints.
For starters, the Russell 2000 has done much better than the S&P 500 over most long-term timeframes and especially since the March 2009 bottom.
On a total return basis, 10,000 invested in the Russell on March 1st 2009 has grown to $27,100 as of Friday’s close, almost a triple.
Here’s what that looks like, percentage-wise, versus the S&P 500 total return index (dividends included):
Keep in mind, also, that the Russell tends to be a lot more cyclical and sensitive than the S&P 500. It has a lot more tech and industrials in it than the large cap indices.
And while it can be more volatile in a downturn, it should be noted that its diversity makes up for it, 2000 stocks is a lot of spreading out of single-stock risk. This is offset by the lower dividend yield and financial flexibility of the companies in the index – but it typically leads the markets out of economic doldrums as stimulus and marginal improvement are more readily felt by companies with less complicated capital and bureaucratic structure.