This mechanical approach ensures that the fund's performance closely tracks the index, minus a small operational fee known as the expense ratio. Because the index is weighted by market value, smaller changes in the price of a low-float stock can have a significant impact on the index's overall movement compared to a large-cap benchmark.
Russell 2000 Index Fund Complete Beginner Guide
Provides broad diversification across 2000 individual securities. Evaluating Expense Ratios and Performance.
When large companies mature and growth slows, small companies often lead the next wave of innovation and market expansion. The fund provider purchases shares of the 2000 constituent companies in proportion to their weight within the index.
Russell 2000 Index Fund Complete Beginner Guide
Offers high growth potential driven by economic expansion. Therefore, this fund is best suited for investors with a higher risk tolerance and a long-term investment horizon who can weather short-term market fluctuations.
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