MarketsJan 1, 2025
The Russell 2000 Is Plotting A Revenge Tour After Years of Underperforming Large-Caps — Here’s What It’ll Take
Equity Rotation
Noah Weidner
Discover
While the S&P 500 and Nasdaq 100 rallied over 24% and 27%, respectively, last year, the growth-flavored Russell 2000 only saw moments of brightness — and ended the year on a less desirable note, up just 11%. This gave the risky, small-cap index its fourth consecutive year of underperforming large-cap indices. But thankfully, Wall Street is reading the tea leaves for a potential Russell rebound in 2025.
What do analysts expect? Through November, Schwab says that 45% of the Russell 2000 was unprofitable over the last 12 months, a figure which has grown alongside rising interest rates. For this reason, some investors have parked their money in mid-caps instead. However, analysts at Jefferies see 2,715 (+21%) by the end of 2025. But the index didn’t finish 2024 as strongly as investors had hoped — and even the typically bullish FundStrat has yet to make good on the 50% Russell rally it forecasted in Mar. 2024. For those considering the Russell 2000, the Vanguard Russell 2000 Index Fund offers exposure to the index with a low 0.09% expense ratio.
