Vanguard Russell 2000 ETF

VTWO

Market cap $17.5B

Small caps have been having a banner year, with the Russell 2000 outperforming the S&P 500 year-to-date. Some small-cap focused ETFs have also surpassed that benchmark.

If you hold the iShares Russell 2000 ETF (NYSEARCA:IWM), you already know it as the default small-cap ticker on every financial channel.

The S&P 500 is generating a positive return in 2026 despite volatility related to the U.S.-Iran conflict. The Russell 2000 has outperformed the S&P 500 by a wide margin because it's more insulated from the unstable geopolitical landscape.

The Russell 2000 is the primary index for small-cap stocks, similar to the S&P 500 for large-cap stocks. The performance gap between the Russell 2000 and the S&P 500 in the first half of the year is the largest since 2001.

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Vanguard Russell 2000 Index Fund ETF Shares (VTWO) is a passively managed exchange traded fund launched on September 22, 2010.

The Vanguard Russell 2000 ETF tracks nearly 2,000 small-cap stocks and has outperformed the S&P 500, Nasdaq and Dow Jones so far this year.

The Russell 2000 is the primary benchmark and index for small-cap stocks. Investing in it involves a higher risk/reward trade-off than investing in large-cap stocks.

Investors searching for the biggest stock winners of 2026 may be surprised to learn they already own some of them through small-cap ETFs.

The Vanguard S&P 500 ETF has gained 10% year to date, but the Vanguard Russell 2000 ETF is up 16%. Small caps have recovered from some of the tariff and inflation pressures earlier this year, but accelerating earnings growth rates are the big catalyst.

The S&P 500 and Russell 2000 are the primary indexes for large-cap and small-cap stocks, respectively. Mid-cap stocks are seen as the sweet spot between stability and growth opportunities.