Vanguard Russell 2000 ETF: A Smart Buy for Small-Cap Exposure

Core Insights - The Russell 2000 serves as the primary benchmark for small-cap investments, demonstrating strong performance in favorable market conditions [1] - The Vanguard Russell 2000 ETF is highlighted as a cost-effective option for investors, with a low expense ratio of 0.06% and a strategy of holding all stocks in the index [2] - The index comprises approximately 2,000 stocks with market caps ranked between 1,001 and 3,000, including both profitable and unprofitable companies [4] Investment Environment - In bull markets, unprofitable stocks within the Russell 2000 can outperform as investors are more inclined to take risks on speculative companies [5] - Long-term investment cycles benefit from exposure to both high-quality and lower-quality companies, allowing investors to navigate market fluctuations effectively [5][9] Comparison with Other Indexes - The S&P 600 index, which is linked to funds like the iShares Core Small Cap ETF, includes stocks outside the S&P 500 and S&P MidCap 400, but applies a quality screen requiring positive earnings [8] - The S&P 600 is tilted towards larger and higher-quality companies, making it a potentially less risky option compared to the Russell 2000 [8] Conclusion - The Vanguard Russell 2000 ETF is considered the best option for long-term investors due to its comprehensive exposure to the small-cap market and its inclusive nature compared to alternative indexes [9]