This Unstoppable Vanguard ETF Is Beating the S&P 500 and the Nasdaq-100 in 2026, but It Could Face a Reckoning Next Week
The Federal Reserve could disrupt the blistering rally in American small-cap stocks.
In 2026, the Russell 2000 index has outperformed two major stock market indexes: the S&P 500 and the Nasdaq-100. As of the market close on September 4, the Russell 2000 had gained 20.2%, surpassing the 12.7% and 17% gains of the S&P 500 and Nasdaq-100, respectively. The Russell 2000 index is composed of approximately 2,000 of America's smaller listed companies, which tend to generate most of their revenue domestically. This makes them more insulated from global disruptions, such as the ongoing conflict in the Middle East.
The Vanguard Russell 2000 ETF (VTWO) is an exchange-traded fund that mirrors the performance of the Russell 2000 index. However, it may face a challenge on September 15 and 16 when the U.S. Federal Reserve holds its next policy meeting. With increasing odds of an interest rate hike, small American companies, the index's constituents, appear to be more sensitive to such policy adjustments compared to larger companies.
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