Russell 2000 swells 84%, investors await update on AMC, GameStop

New York

THE total market capitalisation of the Russell 2000 small-cap stock index jumped 84 per cent over the past year amid the surging popularity of meme stocks and significant growth in the overall size of US-listed companies.

The market value of the index is now US$3.5 trillion, according to benchmark provider FTSE Russell. The smallest stock on the Russell 2000, Velocity Financial, is worth US$257 million, up 171 per cent from the US$95 million value of the smallest stock in May 2020.

The jump in the small-cap companies reflected "the overall bounce back of US equity markets following the Covid-19 recession in early 2020", Catherine Yoshimoto, FTSE Russell director of product management, said in the statement.

FTSE Russell gave the update as it announced its preliminary list of companies that will join or leave its Russell 3000 Index and Russell Microcap Index.

The Russell 2000 has been in the spotlight because of high-profile members AMC Entertainment Holdings and GameStop, both of which have surged in value since the beginning of the year as social media-inspired retail traders have piled in. As a result, they are likely to be removed from the small-cap index.

FTSE Russell's website was down on Friday evening New York time before it posted its statement later that night, as well as on Twitter on Saturday morning. A company representative did not respond to a request for comment.

Further updates to the lists will be posted on its website post-market on June 11 and 18. The final changes will take effect on June 28.

Total US equity market capitalisation rose 52 per cent to US$47.7 trillion as of May 2021, the firm said. Over the past year, value stocks outperformed growth with the Russell 2000 Value Index posting a total return of 79 per cent versus 50 per cent for the growth index. BLOOMBERG