ETF Watch: iShares Plans Russell 2500 Fund

February 22, 2017

A recent filing from iShares outlines the firm’s plans for an ETF that will cover all but 500 of the stocks included in the Russell 3000 Index. The filing for the iShares Russell 2500 ETF does not include a ticker, expense ratio or listing exchange.

The fund seems like it will occupy a unique space. On one level, it seems like it could serve as a completion fund to pair with an S&P 500 ETF, but the S&P 500 is not simply the 500 largest stocks in the U.S. Russell has typically identified the largest 1,000 stocks in its broad-market Russell 3000 Index as the large-cap segment, with the smallest 2000 stocks constituting the small-cap space. Midcaps were typically defined as the 800 smallest stocks in the Russell 1000.

In fact, the $15.4 billion iShares Russell Midcap ETF (IWR) covers that exact index, while the $107.18 million iShares Russell Top 200 ETF (IWL) covers the largest 200 stocks in the Russell 1000. And of course, the small-cap Russell 2000 Index underlies the $36.7 billion iShares Russell 2000 ETF (IWM).

Essentially the proposed fund offers “SMID” coverage combining the small-cap segment and at least a portion of the midcap segment of the broad Russell 3000 Index. The prospectus notes that the Russell 2500 Index accounts for roughly 19% of the total market capitalization of the Russell 3000 Index.

Contact Heather Bell at [email protected].


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