Direct Answer
The Russell 2000 tracks approximately 2,000 small-cap U.S. stocks (companies ranked approximately 1,001 to 3,000 by market cap). Small-cap stocks have historically outperformed large-caps over long periods (the "size premium"), but with significantly higher volatility. The Russell 2000 gained +47.2% in 2003 and fell −34.8% in 2008. Average annual return since inception (1978) is approximately 10-11%.
Russell 2000 Small-Cap Index Annual Returns History
Russell 2000 Annual Returns, 1990-2024
| Year | Annual Return |
|---|---|
| 1990 | -19.5% |
| 1991 | +46.1% |
| 1992 | +18.4% |
| 1993 | +18.9% |
| 1994 | -1.8% |
| 1995 | +28.5% |
| 1996 | +16.5% |
| 1997 | +22.4% |
| 1998 | -2.6% |
| 1999 | +21.3% |
| 2000 | -3.0% |
| 2001 | +2.5% |
| 2002 | -20.5% |
| 2003 | +47.2% |
| 2004 | +18.3% |
| 2005 | +4.6% |
| 2006 | +18.4% |
| 2007 | -1.6% |
| 2008 | -34.8% |
| 2009 | +27.2% |
| 2010 | +26.9% |
| 2011 | -4.2% |
| 2012 | +16.3% |
| 2013 | +38.8% |
| 2014 | +4.9% |
| 2015 | -4.4% |
| 2016 | +21.3% |
| 2017 | +14.6% |
| 2018 | -11.0% |
| 2019 | +25.5% |
| 2020 | +19.9% |
| 2021 | +14.8% |
| 2022 | -21.6% |
| 2023 | +16.9% |
| 2024 est. | +10% |
Source: FTSE Russell: Russell US Indexes. Data through 2024; last checked September 2026.
Frequently asked questions
Why do small-cap stocks have higher long-term returns?
The "size premium" (small-cap outperformance) has been documented in academic research since Banz (1981) and is a cornerstone of factor investing. Explanations: (1) small companies are riskier (less access to capital, less diversified revenue, more cyclical, higher probability of failure), and investors demand a risk premium; (2) small companies have more room to grow relative to large companies that already dominate their markets; (3) small-cap stocks are less widely analyzed, creating more opportunities for mispricing that active and systematic investors can exploit. The premium has been inconsistent: 2007-2024 saw significant periods of large-cap outperformance, especially post-2017 as mega-cap technology dominated S&P 500 returns.
How does the Russell 2000 composition differ from the S&P 500?
The Russell 2000 contains approximately 2,000 stocks with market caps roughly in the $300M-$2B range. The S&P 500 contains 500 stocks with market caps generally above $10B. Key differences: (1) sector composition -- Russell 2000 has higher weight in financials (small regional banks), healthcare (small biotech), industrials; S&P 500 has higher technology weight; (2) profitability -- many Russell 2000 companies are unprofitable (especially biotech); S&P 500 companies are generally profitable; (3) domestic revenue -- small-caps derive approximately 75-80% of revenue domestically vs. S&P 500's approximately 55-60%, making Russell 2000 more sensitive to the U.S. domestic economy and less to global growth.
Does the size premium still exist?
The small-cap size premium has been contested since the mid-1990s when it was first published. From 2007-2024, the S&P 500 (large-cap) outperformed the Russell 2000 (small-cap) in most years, reversed only in 2016, 2020, and 2024. Academic debate: some researchers argue the original premium was a data-mining artifact; others argue it remains but requires sorting by profitability (profitable small-caps earn the premium; unprofitable ones don't). A "quality small-cap" approach (e.g., XSVM, IWN value tilt) has had better results than broad small-cap. The premium also varies significantly by economic regime: small-caps outperform during early-cycle recovery (2003, 2009, 2016) and underperform during late-cycle tech-dominated bull markets.
Worked Example: Through the 2008 Loss, and the Average That Hides It
Put $10,000 into the index at the start of 2008. The year's -34.8% leaves $6,520; 2009's +27.2% takes it to $8,293 and 2010's +26.9% to $10,524, back above the start only at the end of the third year. Two consecutive gains of about 27% were needed to repair one loss of about 35%, because the gains compound from the smaller base: the required recovery after a 34.8% fall is 53%.
Across the 34 completed years in the table, 1990 to 2023, the arithmetic average of the annual returns is 10.7%, but the compound return an investor actually earned is 9.0% a year; $10,000 at the start of 1990 becomes $188,751 by the end of 2023. The gap between the two averages, 1.7 points a year, is the cost of the index's volatility, and it is wider than the same gap for large-cap or bond indexes because the swings in this column are larger. Nine of the 34 years were negative.
Cite This Page
If you reference this table in your own work, use the following citation format and add the date you accessed it:
Swoopr Editorial Team. (2026). Russell 2000 Small-Cap Index Annual Returns History. Swoopr Investment. https://www.getswoopr.com/tables/returns/russell-2000-annual-returns/
Check the figures against the primary sources listed under References before you rely on or republish them; the series they come from are revised.