Russell 2000

Russell 2000 brokers offer trading opportunities in the small-and medium-cap equities market in the US. The index is considered the benchmark for measuring the financial performance of small US firms. This tutorial will rank the best Russell 2000 brokers, with a lowdown of the largest listed companies, the index’s history, and trading tips.

Russell 2000 Brokers UK

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    AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for trading, alongside a comprehensive education center and multilingual customer support.

  2. XTB

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    Founded in 2002 in Poland, XTB now serves more than 935,000 clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of 5,600+ assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring traders.

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    Eightcap is an award-winning, FCA-regulated broker offering industry-low trading fees. They are also the highest-rated brand by TradingView’s 50 million-strong users, who can trade directly on the platform. UK traders can sign up for a live account with an accessible £100 minimum deposit.

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    Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for traders at all levels.

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    Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.

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    IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.

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    DNA Markets is a forex and CFD broker established in 2020. The broker operates two entities in Australia and the offshore jurisdiction, St Vincent and the Grenadines. Traders can access 250+ markets, with a Standard account for beginners and a Raw account for experienced traders. The reliable MetaTrader 4 and MetaTrader 5 platforms are available, alongside Signal Start.

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    eToro is a top-rated multi-asset platform which offers trading services in thousands of CFDs, stocks and cryptoassets. Launched in 2007, the brand has millions of active traders globally and is authorized by tier one regulators, including the FCA and CySEC. The brand is particularly popular for its comprehensive social trading platform. Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply. 76% of retail CFD accounts lose money.

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    OANDA is an award-winning global broker, established in 1996. The hugely respected brand offers competitive trading accounts and serves clients from 196 countries. It remains a popular option with both beginners and experienced traders thanks to its user-friendly and sophisticated web platform, no minimum deposit and premium currency products and services. The company is also overseen by reputable regulators, including the FCA, ASIC and CIRO.

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    Founded in 2006, FxPro is an established forex, CFD and spread betting broker offering 2100+ assets to over 2 million clients worldwide. The broker is regulated in 4 jurisdictions and offers reliable 24/5 customer support, earning it a high trust and safety score. FxPro has also picked up more than 100 industry accolades for its competitive trading conditions, including fast execution and deep liquidity.

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    Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.

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    FXCM is a respected forex and CFD broker, established since 1999. The British-headquartered broker has won multiple awards and operates in various jurisdictions, including the UK and Australia. With zero commissions, over 400 assets, and a range of analysis tools, FXCM remains a popular choice for traders. The broker is also regulated by top-tier authorities including the FCA and ASIC.

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    SimpleFX is an online broker specializing in CFD and cryptocurrency trading, with multi-currency accounts, STP execution, low pricing and no minimum deposit. Bringing innovation and gaining recognition at numerous industry events since 2014, SimpleFX now caters to retail traders from over 190 countries, boasting a client base exceeding 200,000 active users.

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    Libertex is a well-known broker, established in 2012. The regulated brand has served numerous clients and is regulated by the Cyprus Securities and Exchange Commission with license number 164/12. Libertex offers CFD trading on 250+ underlying assets, including through an innovative and user-friendly proprietary web trader platform. Choose between CFDs on forex, cryptocurrencies, commodities, stocks, indices and ETFs, which are available with tight spreads and low commissions.

How To Compare Russell 2000 Brokers

The top Russell 2000 brokers provide everything you need to plan and execute trades, from demo accounts and educational resources to online trading platforms with fast order execution.

Important factors to consider when choosing a brokerage with access to the Russell 2000 include:

Instruments

You can trade the Russell 2000 with various instruments such as CFDs, options and futures. Market-cap-weighted ETFs such as the Vanguard Russell 2000 Growth ETF are also available, which track the overall performance of the index.

Different instruments suit different strategies and timeframes. Traders who want to boost their trading power can choose Russell 2000 brokers that offer margin trading through instruments like CFDs and spread betting, or they could pick a leveraged ETF. Longer-term investors may prefer to buy stocks directly or invest in an index tracker.

Futures are sometimes out of retail traders’ reach, but Interactive Brokers’ micro e-mini Russell 2000 futures contracts are more accessible, reducing the minimum stake to a fraction of the typical upfront cost (1/10 typical e-mini futures).

Regulation

It is always safest to choose a Russell 2000 broker that is overseen by a reputable regulator, and for most good UK brokers that means the Financial Conduct Authority (FCA).

However, British investors are not limited to trading with UK-based brokers, and could consider platforms overseen by top-tier bodies such as the US Securities and Exchange Commission (SEC).

One of the most important safeguards to look out for is negative balance protection, which is mandatory for all FCA-regulated brokers. This prevents retail traders from becoming indebted to brokers following a series of bad trades.

It is also worth ensuring that your Russell 2000 broker follows operational best practices by segregating client assets from their own accounts and using advanced encryption systems.

Platform & Tools

Your Russell 2000 broker should support a stable trading platform that provides swift access to the market and timely execution.

Brokers often provide proprietary software, but they may also support third-party platforms like MetaTrader 4 (MT4) or MetaTrader 5 (MT5).

AvaTrade, for example, provides traders with several platform choices including MetaTrader 4, two bespoke apps, and a proprietary web trader.

Tip: you can test Russell 2000 brokers’ platforms through demo accounts to ensure they provide adequate analysis tools and features such as historical stock price data, customisable charts, signals and technical indicators.

Educational Content

Educational resources can be useful for traders of all experience levels, and many good Russell 2000 brokers provide helpful content.

Look for guides to topics that are relevant to the Russell 2000 as well as regular live streams, videos or podcasts to help with general trading strategy.

Expert analysis in the form of price forecasts, quotes, YTD performance metrics, and annual returns information may also improve your hit rate when trading the Russell 2000.

Customer Support

Choose a Russell 2000 broker that has good customer support. Live chat or phone hotlines are important for urgent queries that need a swift response.

Many reputable Russell 200 brokers offer several contact methods; FxPro, for instance, provides clients with 24/5 customer support including a toll-free UK phone number, email, and live chat.

What Is The Russell 2000?

The Russell 2000 is a capitalisation-weighted index that tracks 2000 small-cap US companies.

The index is managed by FTSE Russell Group and its parent index is the Russell 3000, which constitutes the largest 3000 publicly traded stocks in the United States. This is split into the top 1000 companies, measured by the Russell 1000 index, and the remaining 2000 in the Russell 2000.

FTSE Russell rebalances its indices each May using pre-defined criteria including company structure and size. The list of companies is then ranked by market cap with the largest 1000 taking their place on the Russell 1000 index and the remaining companies categorised into the Russell 2000 and alternative indices.

Although the Russell 2000 comprises around two-thirds of the companies in the Russell 3000, it only accounts for around 7% of the index’s market capitalisation.

Since the Russell 2000 is an index, traders cannot buy and sell shares as they would with ordinary stock. Instead, they can invest in an ETF or other fund that tracks the Russell 2000’s performance, or they can speculate on its price movements using derivatives such as CFDs.

Price Chart

History

The Russell 2000 index was established in 1984 by the Frank Russell Company. It was the industry’s first small-cap benchmark measuring the performance of large numbers of small and medium-cap companies in the US.

Today, the index is operated by the FTSE Russell Group.

Indices

There are two sub-indices associated with the Russell 2000 index:

  • Russell 2000 Value Index – The index includes Russell 2000 organisations with low price-to-book ratios, a low Institutional Brokers’ Estimate System (I/B/E/S) forecast, and a lower sales per share historical growth across the past five years
  • Russell 2000 Growth Index – The index fund includes Russell 2000 companies with a high price-to-book ratio, an elevated Institutional Brokers’ Estimate System (I/B/E/S) forecast, and a high sales per share historical growth across the past five years

Major Stocks

The 10 biggest stocks in the Russell 2000 index by market cap in 2023 were:

  1. Emcor Group Inc
  2. Iridium Communications
  3. Crocs Inc
  4. Inspire Medical Systems
  5. Saia Inc
  6. Kinsale Capital Group
  7. Texas Roadhouse Inc
  8. Shockwave Medical
  9. Rbc Bearings Inc
  10. Halozyme Therapeutics

Some other well-known companies in the Russell 2000 index include Southwestern Energy, Avis Budget Group Inc, and Ovintiv Inc.

The largest sectors represented on the index in 2023 were industry with 17.7%, finance with 16.8%, and healthcare with 15.4%.

Good Russell 2000 brokers provide financial metric data for the top 50 stocks, while some cover all listed companies. A comprehensive data offering should include market cap values, performance growth, upcoming announcements and more.

Trading Hours

Trading hours on the Russell 2000 index vary depending on the product and broker.

CME Globex, for example, offers Russell 2000 futures trading from Sunday 6pm to Friday 5pm Eastern Time (GMT-6) with a trading halt between 4:15pm and 4:30pm. Alternatively, the Chicago Board Options Exchange offers trading on Russell 2000 options between 9:30am and 4:15pm (ET).

Some Russell 2000 brokers may also offer premarket and after-hours trading.

Listings

A reconstitution cycle takes place once a year at the end of Q2, when the listings are adjusted to reflect the companies’ performance.

As old firms move out of the index and new firms are introduced in a continuing cycle, the number of holdings within the index will often fluctuate under or over 2000.

Russell 2000 Vs Other Indices

As a small-cap index, the Russell 2000 index has a very different composition to an index like the S&P 500, which tracks the performance of 500 of the largest US firms including giants like Apple, Amazon, and Microsoft, or the Dow Jones, which tracks 30 of the top US companies.

The Russell 2000 index instead measures the share value of lesser-known small-cap firms, so it is more appropriate to compare it to another small-cap capitalisation-weighted index like the S&P 600.

Over a long timeframe, the less volatile S&P 600 has outperformed the Russell 2000, with average returns of 12.8% per year compared to the Russell 2000’s 11.2% per year in the decade up to February 2022.

The S&P 500 tends to perform better than either, with an average annual return of 14.6% over the same period.

Small Cap Risks

Investors tend to turn to small-cap stocks when looking for high-risk, high-return investments. Small-cap stock prices typically increase when an economy grows, but economic uncertainty such as inflation and financial recession usually hit smaller companies harder.

According to a Morgan Stanley publication, over 40% of Russell 2000 listed organisations were unprofitable during the challenging macroeconomic conditions of 2022. Overall, the Russell 2000 index tends to be more volatile as smaller companies are generally less equipped to shield themselves from macroeconomic turmoil.

Economic calendars offered by some Russell 2000 brokers are therefore a useful tool for keeping up to date with upcoming events and political announcements that may impact your positions. This includes reconstitution dates each year and new entries to the market which can create volatility.

Bottom Line On The Russell 2000

Russell 2000 brokers offer an accessible way to speculate on the performance of lesser-known US companies. As a retail investor, you can expect to trade ETFs, CFDs, futures, and options on this small-cap index. And although the added volatility of the Russell 2000 brings risks, this selection of small-cap stocks also offers investment opportunities.

FAQ

How Is The Russell 2000 Index Constructed?

The Russell 2000 index is a stock market index that tracks the performance of the smallest 2000 firms, by market cap, listed on the Russell 3000 index. The index is operated by FTSE Russell, an entity of the London Stock Exchange Group (LSEG).

What Companies Are In The Russell 2000 Index?

The Russell 2000 index constitutes the smallest 2000 domestic US stocks listed on the Russell 3000 index. The list of companies in the Russell 2000 changes frequently according to market capitalisation.

Major firms include Nesco Holdings Inc, Hertz Global Holdings Inc, Avis Budget Group Inc, and Iridium Communications.

How Can I Trade The Russell 2000 Through Online Brokers?

You can trade the Russell 2000 index via online brokers through derivatives such as CFDs. You can also invest in ETFs or funds that track the Russell 2000 or purchase shares in individual companies that are listed on the index.

How Do I Choose A Russell 2000 Broker?

There are several factors to consider when comparing the best Russell 2000 brokers. Review trading fees, platform access, investing products, access to customer support, UK regulations, and user ratings. The majority of deliberations, however, will be dependent on your trading strategy and goals.

Article Sources

Russell 2000 index fact sheet

FTSE Russell indices

S&P Global small cap benchmarks