S&P 500 vs. RUSSELL 2000

Are they moving in the same direction?

Both the Russell 2000 and S&P 500 are important stock market indices, but they have different characteristics and performance profiles:

S&P 500

• Tracks 500 large-cap U.S. companies

• More stable and consistent returns

• Lower volatility

• Lower expense ratios for related ETFs

• Higher liquidity

• Significant international exposure (about 40% of sales from abroad)

Russell 2000

• Tracks 2,000 small-cap U.S. companies

• Higher growth potential

• More volatile

• More diversified across sectors

• Primarily focused on domestic U.S. economy

Historically, the S&P 500 has generally outperformed the Russell 2000 during both recessionary periods and times of declining interest rates since 1984. Please also note that these indices have very high daily correlation, especially during periods of economic and financial stress.

Divergence since late 2022

Since late 2022 the daily correlation between the indices have been relatively low since S&P 500 has clea…