S&P 500 VS. RUSSELL 2000 ETF: WHAT’S THE DIFFERENCE?
S&P 500 VS RUSSELL 2000 ETF
The three most commonly traded ETFs that track the performance of the S&P 500 index include:
BlackRock’s iShares Core S&P 500 ETF (IVV)
Vanguard’s S&P 500 ETF (VOO)
The oldest and the most widely held of the three ETFs is SPY.
average daily trading volume of 30 to 60 times that of IVV and VOO.
When comparing the performance numbers of the three—represented by net asset value (NAV) returns—all three slightly underperformed the S&P500 index over the last 10 years. VOO is the new kid on the block with a fund inception date of Sept. 9, 2010, so, it has fewer years of data for consideration. also The SPY returned the lowest of the three funds. The lowered return is to be expected since it has the highest expense ratio among the three ETFs. Also, it must be understood that the funds are comparing to the virtually frictionless S&P 500 Index.
SPY is also structurally different from IVV and VOO in that it is set up as a unit investment trust (UIT) with restrictions on lending the underlying shares to other firms. Additionally, any dividends from SPY constituents for the period are collected and held in cash until distribution, whereas IVV and VOO allow for the reinvestment of dividends.
Russell 2000 ETFs
On the opposite side of the spectrum is the Russell 2000 Index that follows the performance of around 2,000 U.S. small-cap firms. Like the S&P 500, the index is weighted and regularly serves as a benchmark index.
As the name suggests, Russell 2000 ETFs closely track the Russell 2000 Index, which combines 2000 of the
publicly traded U.S. stocks. S&P 500 VS. RUSSELL 2000 ETF
Both the S&P 500 and Russell 2000 indexes are market-capitalization-weighted. Unlike the S&P 500 index, however, the securities in the Russell 2000 index are not selected by a committee, but rather through a formula based on their market cap and current index membership.
The most notable ETFs tracking the Russell 2000 index, in the order of their significance, are:
Direxion Daily Small Cap Bill 3x Shares (TNA)
Here again, the higher liquidity of Blackrock’s IWM seems to drive its higher expense ratio. Compared to the S&P 500 ETFs, however, all funds tracking the Russell 2000 index command higher fees despite their much lower overall liquidity.IWM is the heaviest traded Russell 2000 ETF, yet it trades at just one-quarter of the volume of SPDR’s SPY. The higher fees of Russell 2000 ETFs are likely due to the increased management effort of periodically balancing a larger number of securities.Russell 2000 ETFs may look more attractive than S&P 500 ETFs at the start of a bull market. The Russell 2000 constituents on average are bound to outperform their big brothers in the S&P 500 Index if the uptrend continues. also The challenge is the volatility of their returns. So, as an investor, you may be in for a rough ride. S&P 500 VS RUSSELL 2000 ETF
on the size, geographical location, or sector affiliation of companies in the index.
Two of the more popular choices are the S&P 500 ETFs and Russell 2000 ETFs. Key distinctions between them are driven by the size of the companies in the index they track—large-cap for the S&P 500 and small-cap for the Russell 2000—the volatility of the underlying index, the method of constituent selection, and the fees they charge.
You can also buy instant:
Cashapp Money Transfer Click here
Paypal Money Transfer Click here
Western Union Money Transfer Click here
Venmo Money Transfer Click here
Bank Money Transfer Click here to Contact Us