Meet the Magnificent Small-Cap ETF Crushing the S&P 500 in 2026. Is It Still a Buy?

Larger companies thin to get overmuch much attraction successful the banal marketplace than smaller ones, which makes sense. People interact overmuch much with Apple, Coca-Cola, oregon Amazon than with a determination mining company, niche pharmaceutical company, oregon section bank.

However, attraction doesn't ever construe to banal marketplace performance. There are plentifulness of small-cap stocks that person performed good and proceed to bash so. The iShares Russell 2000 ETF (NYSEMKT: IWM) is simply a bully illustration of this, outperforming the S&P 500 by 20.5% to 7.2% truthful acold this year, arsenic of marketplace adjacent connected June 26.

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Given its caller performance, is IWM inactive a buy? It depends connected your objective.

A batch of crushed covered with 1 ETF

While the S&P 500 is the main scale for large-cap stocks, the Russell 2000 is fundamentally the equivalent for small-cap stocks. It tracks the 2,000 smallest stocks successful the Russell 3000 index, covering a batch of crushed crossed large sectors.

The S&P 500 has go tech-heavy (38.6% of the index), but the Russell 2000 is overmuch much diversified. Its apical 5 astir represented sectors are:

• Industrials: 19.1%

• Information exertion (tech): 17.6%

• Healthcare: 17.4%

• Financials: 16.4%

• Consumer discretionary: 7.9%

Small-cap stocks are known for being much prone to volatility due to the fact that they're much affected by broader economical conditions, but investing successful a wide small-cap ETF similar IWM gives you the champion of some worlds. You get the high-growth imaginable of small-cap stocks without being susceptible to a azygous company's risk.

How IWM has stacked up against the S&P 500

IWM is outperforming the S&P 500 truthful acold this year, and has outgrown it since it started trading successful May 2000, but this past decennary has belonged to the S&P 500.

Data source: YCharts. Returns are done marketplace adjacent connected June 26, 2026.

We can't foretell however either volition execute going forward, but they're some bound to beryllium bully semipermanent investments. The maturation of megacap tech stocks is apt to beryllium the crushed the S&P 500 outperforms successful the adjacent future, but that doesn't diminish IWM's semipermanent appeal.

Is IWM inactive a bargain close now?

If you're wanting to put successful IWM expecting different 20% returns implicit the 2nd fractional of the year, your expectations are astir apt excessively high. It's been a large commencement to 2026 for IWM, but that shouldn't beryllium what's expected.