How Is iShares Russell 2000 Index (ETF)(NYSEARCA:IWM) Performing?


Small-cap firms boast higher long-term returns compared to large-cap counterparts. Despite this fact, many investors prefer to invest in exchange-traded funds comprising small-cap stocks so as to achieve diversification and avoid higher risks of investing in individual companies. Here, it is important to mention that not all small-cap exchange-traded funds are the same, and it is the same case with iShares Russell 2000 Index (ETF)(NYSEARCA:IWM) that has recorded strong performance for their investors over time.

The priority

iShares Russell comes in the list of leading small-cap tracking exchange-traded funds. It has assets of almost $28.5 billion in under management. The objective of the ETF is to track the performance of Russell 2000 small-cap index. For the purpose iShares ETF utilizes the brute-force measure of owning approximately 2,000 stocks in portfolio to monitor the index.

iSharesexpense ratio of 0.20% cannot be stated as the lowest in the industry, but the liquidity of ETF makes it extremely attractive to everyday traders. The fund has recorded average daily volume of nearly 8 million shares in the past month, becoming an attractive option for both institutional and individual investors. Its average yearly total return of 7.5% in the past ten years as of October 31 has posted an excellent performance of tracking its benchmark.

Seeking a cheaper alternative

Apart from iShares ETF, the list of fund-tracking prevalent small-cap indexes include the Vanguard Small-Cap ETF. It monitors a different index, holding almost 1,500 stocks in the “CRSP U.S. Small-Cap” Index. In fact, it has managed to beat benchmark’s average yearly returns, delivering investors more than 8% over the decade ending October 31.

The ETF’s claim to prominence is an expense-ratio that stands at less than half of the expense ratio of iShares fund. However, the Vanguard ETF lacks the same liquidity boasted by the iShares ETF.