In 2026, the iShares Russell 2000 ETF (IWM) outperformed the S&P 500, gaining 6.8% while the S&P 500 declined by 0.1%. The ETF returned 17.6% over the past year. The Federal Reserve cut rates three times in 2025 to 3.50%-3.75%, benefiting small caps in the Russell 2000 ETF. Small cap earnings grew 12% in late 2025, surpassing large caps for the first time since 2021. A study revealed a single habit that doubles Americans’ retirement savings. Warren Buffet advocates for low-cost S&P 500 index funds for investors.

The iShares Russell 2000 ETF (NYSEARCA:IWM) has outperformed the S&P 500, gaining 6.8% year-to-date and 17.6% over the past year. Small-cap stocks faced challenges due to the pandemic, high debt loads, inflation, and rising interest rates. The Russell 2000 Index returned just 2.2% annually from 2020 to 2024, lagging behind the S&P 500. However, earnings rebounded in late 2025, with small caps showing growth. The Fed’s rate cuts in 2025 eased pressure on small businesses, boosting access to capital for hiring and investment.

Looking ahead, economists project more rate cuts by the Fed, potentially benefiting small caps further. The iShares Russell 2000 ETF provides exposure to U.S. small-cap stocks, ranging from $8 million to $39 billion in market value. The ETF’s top holdings focus on diversified growth plays, with no single stock exceeding 1% of assets. Small-cap stocks historically outperform large caps, and the iShares ETF offers a simple way to capture this potential.

A study revealed a simple habit that can double Americans’ retirement savings without requiring increased income or significant lifestyle changes. Despite its effectiveness, many individuals overlook this habit.

Read more at Yahoo Finance: Here’s the Surprising ETF Trouncing the S&P 500 in 2026