Vanguard Russell 2000 Index ETF underperforms, lacks exposure to AI, and may be impacted by market volatility.

From Nasdaq: 2025-06-25 04:28:00

Investors looking to benefit from small-cap companies can consider the Russell 2000 index, consisting of about 2,000 small publicly traded domestic companies. However, the Vanguard Russell 2000 Index ETF (NASDAQ: VTWO) has underperformed the S&P 500, with a 25% gain over three years compared to the S&P 500’s 66% increase.

The Vanguard Russell 2000 Index ETF lacks exposure to the significant tech trend of artificial intelligence, missing out on potential gains from companies like Nvidia. With AI estimated to become a $16 trillion industry in the next five years, this omission could impact investor returns. Small-cap stocks, like those in the index, are typically riskier and more volatile than the broader market.

Given the market volatility and potential for a recession, investing in the Vanguard Russell 2000 Index ETF could lead to larger drops compared to the broader market. Investors may want to consider other Vanguard ETFs that offer more exposure to tech or track the S&P 500 to diversify and tap into growing trends like AI.

The Motley Fool analysts have identified 10 top stocks to buy now, none of which include the Vanguard Russell 2000 ETF. Historically, their stock picks have outperformed the market significantly, with average returns of 793% compared to the S&P 500’s 173%. Investors can access the latest top 10 list by joining the Stock Advisor service.

In conclusion, while the Vanguard Russell 2000 Index ETF isn’t necessarily a bad investment, its lack of exposure to AI and potential market volatility may make it less appealing. Consider other Vanguard ETFs for diversification and exposure to growing tech trends, ensuring a balanced investment strategy.



Read more at Nasdaq: Is the Vanguard Russell 2000 Index Fund ETF a Buy Now?