The Russell 2000 tracks the roughly 2000 securities that are considered to be US small cap companies. The Russell 2000 serves as an important benchmark when investors want to track their small cap performances versus other sized companies. 

Contrary to the performance of most small businesses in the United States, 2020 was a good year for the Russell 2000, with its overall performance up 20% from 2019. The small-cap index surged more than 26% in Q4 of 2020, significantly eclipsing the Russell 1000, it’s large-cap counterpart, as vaccine breakthroughs and steadfast monetary and fiscal support spurred economic recovery hopes for the coming year. This year's record M&A activity also helped smaller stocks, which are often takeout targets.

The Russell 2000 index was up approximately 90% from March 2020 to March 2021. It hit a low of $1035.39 on 4/3/20, but has since bounced back 112% with a close of $2195.80 on 3/30/21. In 2021, the Russell 2000 Index has jumped approximately 11% year to date as of March 30, 2021. The possibility of a faster-than-expected reopening of the U.S. economy and unprecedented fiscal and monetary stimulus seems to have restored market participants' confidence in small businesses.

Why did the Russell 2000 perform so phenomenally when small businesses seem to be crashing everywhere in 2020? First and foremost was the aid provided by the US government provided to small businesses in excess of $800 billion in 2020 as a part of the CARES Act. Forgivable PPP Loans made it possible for several eligible small businesses to stay afloat. Additionally, Operation Warp Speed has accelerated COVID-19 vaccinations. The speeding up of the vaccination process implies chances of a faster-than-expected reopening of the U.S. economy. The reopening of the economy with the easing of the pandemic will significantly ramp up small business activities. 

The question remains, will this trend continue? According to Todd Salamone, Senior Senior Vice President of Schaeffer’s Investment Research, the technical picture of the Russell 2000, along with ETF’s like the iShares Russell 2000 ETF, suggest that the rising trend will likely continue. 

Small Cap companies to consider: AAU.V, SSVR.V, BYOC, CEI, CURR, FRSX, JAGX, GBS, PPCB & TZA