Russell Microcap Index

What Is the Russell Microcap Index?

The Russell Microcap Index comprises of the smallest 1,000 securities in the small-cap Russell 2000 Index, plus the next 1,000 smallest eligible securities in view of a combination of their market capitalization and current index participation weight.

The broad index is intended to introduce a fair-minded assortment of the smallest tradable securities that actually meet exchange listing requirements, so over-the-counter (OTC) stocks and pink sheet securities are excluded.

Grasping the Russell Microcap Index

While the Russell 2000 is the most ordinarily quoted small-cap index, the Microcap Index is an important device for looking at trends in smaller, startup companies known as micro-caps. The Index is totally reconstituted yearly to guarantee new and developing equities are reflected and companies keep on reflecting fitting capitalization and value qualities.

The current index's main five sector weightings are financial services, healthcare, consumer discretionary, producer durables, and technology. Healthcare (joining drugs and biotech) names make up four of its 10 biggest holdings.

The Microcap Index addresses just a small part of the overall U.S. equity market by capitalization. As of October 2020, the index's stock with the market cap was S2.89 billion, with a median stock value of just $256 million. The best 10 index constituents as of that time were as per the following:

1. Overstock Com Inc (consumer discretionary)
2. Digital Turbine Inc (consumer discretionary)
3. Sorrento Therapeutics (healthcare)
4. Workhorse Group Inc (industrials)
5. Vivint Solar Inc (consumer discretionary)
6. Kura Oncology Inc (healthcare)
7. Cryoport Inc (industrials)
8. Owens and Minor Inc (healthcare)
9. Maxar Technologies Inc (industrials)
10. Seres Therapeutics Inc (healthcare)

Other Russell Microcap Indices

Notwithstanding the Microcap Index, Russell keeps a Microcap Growth (with 869 holdings) and a Microcap Value Index (1,058 holdings).

The Russell Microcap Growth Index measures the performance of the microcap growth segment of the U.S. equity market. It incorporates Russell Microcap companies that are viewed as more growth oriented relative to the overall market as defined by Russell's leading style methodology. Also, the Russell Microcap Value Index incorporates Russel Microcap companies that are viewed as more value-oriented.

Investing in Microcap Stocks

Microcap stocks make up under 3% of the U.S. equity market. These smaller company stocks are trying to invest in given critical issues with liquidity and thin trading volumes. Investors hoping to gain exposure to the asset class can purchase a exchange traded fund (ETF) that reproduces the Russell Microcap Index from iShares, which trades under the ticker (IWC).

However, there are important differences between the benchmark index itself and the iShares' fund. For instance, IWC has approximately 1,400 holdings with its 10 biggest holdings all in the healthcare sector, trailed by financials, data technology, consumer discretionary, and industrials that round up the main five sector weights.

Features

• Microcaps will generally be less secure and more unpredictable than enormous cap stocks, yet can likewise create diamonds in the unpleasant with better than expected growth potential.
• The Russell Microcap index covers the smallest stocks in the Russell 2000 with market caps between around $50 million and $300 million.
• The Russell Microcap Index is developed to give an exhaustive and unprejudiced barometer for the microcap segment trading on national exchanges.