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Investing in Small Caps
A review of the iShares Russell 2000 ETF ($IWM)
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The BlackRock iShares Russell 2000 ETF ($IWM) is an exchange-traded fund (ETF) that tracks the investment results of the Russell 2000 Index. IWM ETF provides low-cost, diversified exposure to small-cap equities via a single fund.
FTSE Russell sponsors the Russell 2000, and the index is a subset (or underlying index) of the overall Russell 3000 Index, which intends to measure the performance of a broad base of U.S. companies.
As of March 2023, the Russell 2000 comprises 1,921 of the smallest companies in the Russell 3000 and is a float-adjusted capitalization-weighted index. The index is reconstituted each calendar year on the fourth Friday in June. To find out more about the inclusion criteria, click here.
Investors can benefit from the IWM ETF in many ways. For starters, it provides an easy way to invest in small-cap stocks without researching each company. Secondly, investors avoid paying hefty management costs via a low-cost ETF structure (Expense Ratio 0.19%). Lastly, investing in nearly 2000 companies in the Russell 2000 can lower the risk typically associated with small-cap concentrated exposures.
Here are some examples of investors who may benefit by investing in this ETF:
Beginner investors
Investors with longer time horizons looking for higher potential returns
Advanced investors seeking low fees
Risk-seeking investors
IWM is an excellent option for long-term investors looking to add risker exposure via small-cap companies to their portfolios.
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