Direct Answer
The Russell 2000 Growth Index measures the growth-oriented segment of the Russell 2000, which itself represents the bottom 2,000 stocks by market capitalization in the Russell 3000 universe. FTSE Russell, a subsidiary of LSEG, administers the index and assigns each Russell 2000 constituent a composite growth score. Companies with the highest growth scores are fully included in the Growth index; companies near the style boundary receive partial weights shared with the Russell 2000 Value Index.
What the Russell 2000 Measures
The Russell 2000 is one of the most widely cited benchmarks for U.S. small-cap equities. It captures the bottom 2,000 stocks by market capitalization within the Russell 3000, which itself aims to represent a very large portion of the investable U.S. equity market by total market capitalization. Because the coverage of the Russell 3000 is broad and rules-based, the Russell 2000 provides comprehensive representation of the small-cap segment rather than a narrow or committee-selected slice of it.
The Russell 2000 Growth Index is a style sub-index of the Russell 2000. It does not stand alone as a separate universe. Instead, every stock in the Russell 2000 is analyzed for its growth and value characteristics, and the results determine how each stock is weighted within the Growth and Value sub-indexes. Understanding the parent index is therefore essential before analyzing the growth subset in isolation, because the Growth index inherits the membership rules and float-adjustment methodology of the Russell 2000 itself.
FTSE Russell maintains detailed methodology documentation that governs how membership, float adjustment, and style classification work together. Investors and researchers relying on this index should consult the current methodology guide published by FTSE Russell directly, since rules can evolve with each annual reconstitution cycle and the published documentation is the authoritative source on how specific edge cases are handled.
How the Growth Score Works
FTSE Russell assigns each Russell 2000 constituent a composite growth score by combining three variables. The first is I/B/E/S forecast medium-term earnings growth, which reflects analyst consensus expectations for the company's earnings over the coming years. The second is historical sales per share growth, which captures recent revenue expansion on a per-share basis. The third is 12-month price momentum, which reflects how much the stock price has appreciated over the trailing year relative to the broader universe.
Each variable is standardized and then combined into a single composite score. Companies whose composite growth scores place them clearly in growth territory receive a full growth weight, meaning the entirety of their float-adjusted market capitalization is attributed to the Growth index. Companies whose scores sit in the middle range receive a partial weight: a portion of their float-adjusted market cap goes to the Growth index, and the remainder goes to the Value index. This partial allocation is what allows the Growth and Value sub-indexes to sum back to the full Russell 2000 when combined by market capitalization.
The use of both forward-looking (earnings forecast) and backward-looking (sales growth, price momentum) factors means the growth score reflects expectations as well as demonstrated performance. A company can score high on momentum and sales growth while still carrying modest analyst expectations, or it can score high on forward earnings estimates while showing limited historical sales growth. The composite weighting is designed to balance these different perspectives on growth potential rather than relying on any single variable that could be distorted by temporary conditions.
Annual Reconstitution in June
FTSE Russell reconstitutes the entire Russell US index family each year, typically completing the process in late June. During reconstitution, the full Russell 3000 eligible universe is re-ranked by total market capitalization. Stocks that have grown above the Russell 2000 size threshold migrate to the Russell 1000. Stocks that have fallen below the minimum market cap threshold are removed entirely. New companies that have reached sufficient size are added for the first time. The style scores for Growth and Value assignment are also recalculated during this process, so companies can move between sub-indexes even if their overall Russell 2000 membership is unchanged.
The effective date of reconstitution changes typically falls at the end of June. FTSE Russell publishes a detailed timeline and preliminary lists in advance so that index-linked products, such as exchange-traded funds and index mutual funds, can manage the associated portfolio turnover in an orderly way. The advance notice period is important because the small-cap segment can be less liquid than large-cap equities, and pre-announced changes allow market participants to plan trading accordingly.
Between annual reconstitutions, FTSE Russell adds newly public companies on a quarterly basis if they meet size and eligibility requirements at the quarterly review date. Companies can also be removed between reconstitutions if they cease to meet basic eligibility standards, for example due to bankruptcy filing, exchange delisting, or acquisition. This quarterly addition window is particularly relevant for the small-cap universe, where IPO activity can be substantial and where a newly listed company can quickly become large enough to qualify for inclusion.
Style Overlap with the Value Index
The Russell 2000 Growth and Russell 2000 Value indexes are not mutually exclusive. Because FTSE Russell uses a partial-weight methodology for companies near the style boundary, some stocks appear in both sub-indexes simultaneously with weights that add up to 100 percent of their float-adjusted market cap. This is a deliberate design choice that reflects the reality that many companies do not fit neatly into a single style category at any given moment in time.
The practical implication is that an investor who holds both the Growth and Value sub-indexes in proportion to their respective weights will, in aggregate, replicate the full Russell 2000. The sub-indexes can be combined or held separately depending on the investment objective. An investor seeking relatively pure growth style exposure should understand that a portion of the index consists of stocks classified as style-neutral or near-boundary by the scoring methodology, and those stocks contribute differently to performance than the most clearly growth-classified members.
This style boundary overlap also means that the Growth index and Value index do not form a perfectly clean partition of the Russell 2000 by company. A stock that receives a majority of its weight in Growth and a minority in Value will appear on both the Growth and Value constituent lists. Investors who screen the constituent list looking for clear-cut growth or value classifications will find this ambiguity at the style boundary is a feature of the methodology, not a data error.
Comparing Russell 2000 Growth and Russell 1000 Growth
The Russell 1000 Growth Index draws from large-cap companies in the top 1,000 of the Russell 3000, while the Russell 2000 Growth draws from the bottom 2,000. Both use the same style scoring methodology, but they represent fundamentally different segments of the U.S. equity market in terms of company size, liquidity, and business maturity.
Large-cap growth companies in the Russell 1000 Growth tend to have established revenue bases, broad analyst coverage, and deep secondary market liquidity. Many have demonstrated sustained growth over multiple business cycles and have reached scale in their respective markets. Small-cap growth companies in the Russell 2000 Growth often have shorter operating histories, narrower revenue streams, and less analyst attention. Their growth scores can be more volatile from year to year as early-stage business results fluctuate with each quarterly report.
Return patterns differ as well. Small-cap growth stocks as a category can experience more pronounced drawdowns in risk-off environments because investors often reduce exposure to higher-risk, less-liquid assets during periods of market stress. In bull markets driven by optimism about future earnings, the small-cap growth segment can produce strong returns if sentiment remains supportive. The performance gap between small-cap and large-cap growth stocks over any given period reflects economic conditions, interest rate levels, and investor risk appetite as much as it reflects differences in underlying business fundamentals.
Comparing Russell 2000 Growth and Russell 2000 Value
The Russell 2000 Value Index is the counterpart to the Growth index within the same small-cap universe. Both draw their membership from the same Russell 2000 parent, but the style scoring determines how their weights differ. Growth stocks are selected based on earnings growth expectations, sales growth, and price momentum. Value stocks are selected based on high book-to-price ratios and lower growth scores. Because they draw from the same parent index and use partial weighting at the boundaries, the two sub-indexes together reconstruct the full Russell 2000 by market capitalization.
The Growth and Value sub-indexes tend to perform differently across economic and market cycles. Growth stocks often outperform in environments where investors are willing to pay premium valuations for future earnings potential. Value stocks can outperform when interest rates rise, when economic recoveries broaden to cyclical sectors, or when growth stock valuations compress after periods of extended outperformance. Within the small-cap tier, both style categories tend to be more volatile than their large-cap counterparts, which amplifies the return divergence between the two sub-indexes during periods of sharp style rotation.
Sector composition also differs meaningfully between the two sub-indexes. The small-cap growth segment often carries heavier concentration in technology, biotechnology, and health care, where future earnings potential matters more than current book value. The small-cap value segment often carries more exposure to financials, real estate, energy, and industrials, where assets on the balance sheet anchor valuation analysis. These sector differences drive much of the cumulative return divergence between Growth and Value over long periods.
Why Small-Cap Growth Behaves Differently from Large-Cap Growth
Small-cap growth stocks occupy a distinctive position in the equity risk spectrum. They combine the higher fundamental uncertainty typical of small companies with the elevated valuation multiples often associated with growth stocks. A company with limited revenue and high growth expectations can trade at a very high price-to-earnings or price-to-sales multiple, amplifying the impact of any shortfall in results relative to expectations. When a small-cap growth company misses an earnings estimate, the repricing can be severe because there is little margin of safety built into the valuation at premium multiples.
Analyst coverage is thinner in the small-cap space. Many small-cap companies are followed by only a handful of sell-side analysts, and some receive no formal coverage at all. This lower coverage means that information about business developments takes longer to be incorporated into market prices, and when new material information does emerge, price reactions can be abrupt and large relative to the information content of the news. For growth companies where earnings forecasts are a key input to the style score and to investor valuation frameworks, this information asymmetry matters more than it does in large-cap stocks with extensive analyst attention.
Liquidity is also more constrained in the small-cap segment. Smaller daily trading volumes mean that institutional investors can face meaningful market impact costs when building or reducing positions. This contributes to higher realized volatility and can cause the index to underperform during periods of market stress when investors seek to reduce risk quickly. Conversely, when capital flows into the small-cap growth segment, the same constrained liquidity dynamics can amplify upward price movements beyond what fundamentals alone would justify.
Concentration and Sector Exposure
The sector composition of the Russell 2000 Growth Index is not fixed and shifts with each annual reconstitution as the style scores of individual companies change and as IPO activity introduces new companies to the small-cap universe. Historically, technology and health care have been significant sectors within the index, reflecting the concentration of growth-oriented companies in those industries. Biotechnology in particular has historically been a notable sub-sector given that drug development outcomes can be binary events, which produce both very high growth scores for successful companies and very high return volatility at the individual stock level.
The index uses float-adjusted market-cap weighting among its constituents, but it is not a highly concentrated single-stock index in the way that a mega-cap index can be dominated by one or two names. Because the Russell 2000 contains a large number of constituents, the Growth sub-index also contains a substantial number of individual stocks, limiting the contribution of any single name to the overall index level. However, sector-level concentration can still be meaningful, and a sharp rotation out of a sector that has been favored by growth-style classification can have a visible impact on the index's performance over a quarter or a year.
Investors who track or benchmark against the Russell 2000 Growth Index should review the current sector composition periodically, as published by FTSE Russell on a regular basis. The sector mix reflects both the composition of the small-cap IPO market in recent years and the style dynamics that shift companies between the Growth and Value sub-indexes at each reconstitution. A strong year for technology IPOs, for example, can increase the index's exposure to that sector without any change to the methodology itself.
Return Variants
FTSE Russell publishes the Russell 2000 Growth Index in multiple return variants. The price return version reflects changes in the price level of constituents only, without accounting for dividends. The total return version reinvests dividends at the ex-dividend date, providing a more complete picture of the return that would have been available to an investor who held the index and reinvested all distributions. The net total return version accounts for withholding taxes that international investors may incur on dividends received from U.S. equities, making it more relevant for cross-border performance comparisons.
For investment performance comparison purposes, the total return variant is generally the most relevant because it captures the full economic return of holding the index over time. Small-cap growth companies tend to pay lower dividends or no dividends at all compared with value-oriented companies at similar size, which means the spread between price return and total return is typically narrower for the Growth sub-index than for the Value sub-index. The difference is still present, however, and researchers comparing multi-period returns across indexes should confirm which return series they are using to avoid inadvertent inconsistencies in the analysis.
Index-linked products seeking to replicate the Russell 2000 Growth Index may use any of these return variants as their official benchmark, and the choice of variant affects the appropriate basis for measuring tracking error. Investors evaluating such products should confirm which return variant the product uses as its benchmark before drawing comparisons to a published index series.
Frequently asked questions
Who administers the Russell 2000 Growth Index?
FTSE Russell, a subsidiary of LSEG (London Stock Exchange Group), administers the Russell 2000 Growth Index and publishes the methodology governing its eligibility, scoring, and weighting rules.
How does FTSE Russell decide which stocks belong in the Growth index?
FTSE Russell scores each Russell 2000 constituent on three factors: I/B/E/S forecast medium-term growth, historical sales per share growth, and 12-month price momentum. Companies with the highest composite scores are fully included in the Growth index. Companies near the style boundary receive partial weights split between the Growth and Value indexes.
What is the difference between the Russell 2000 Growth and Russell 2000 Value indexes?
The two indexes classify small-cap U.S. stocks by style. Growth includes companies with high scores on earnings growth forecasts, sales growth, and price momentum. Value includes companies with high book-to-price ratios and lower growth expectations. Stocks near the boundary between the two can receive partial membership in both indexes simultaneously.
How often is the Russell 2000 Growth Index reconstituted?
FTSE Russell reconstitutes the Russell US indexes annually each June. New membership takes effect at the end of June. Newly listed companies such as IPOs and spinoffs can be added quarterly between main reconstitutions.
What is the difference between the Russell 2000 Growth and Russell 1000 Growth indexes?
Both indexes measure growth-style U.S. equities, but they come from different size tiers. The Russell 1000 Growth draws from large-cap companies in the top 1,000 of the Russell 3000. The Russell 2000 Growth draws from small-cap companies in the bottom 2,000. Small-cap growth stocks tend to be more volatile, less liquid, and more dependent on future earnings delivery than large-cap growth stocks.