Global X announced on Wednesday the launch of the only exchange-traded fund (ETF) in Australia to track the Russell 2000 Capped Index, the Global X Russell 2000 (RSSL).
RSSL, according to the ETF manager, provides investors with exposure to US small cap equities, a segment of the market often positioned to capitalise on emerging opportunities.
This includes the financial, healthcare and industrial sectors, which Global X said are often under-represented in large-cap indices like the S&P 500.
“Small-cap equities often outperform during economic recoveries and periods of financial easing,” senior investment strategist Billy Leung said.
“Combined with Trump’s pro-growth and pro-business stance, US small caps are positioned to benefit significantly and offer long-term growth opportunities,” the strategist added.
With projected gross domestic product (GDP) growth of 2.1 per cent in 2025, the US is set to outpace other developed economies.
Moreover, data from Global X has shown that, during the first Trump administration, the Russell 2000 outperformed the S&P 500.
“By indexing the Russell 2000, RSSL gives investors exposure they might be short in, offering a diversification premium across small-cap growth and mega-cap innovation,” the ETF provider said.
In a market note earlier this week, Leung highlighted how small caps can provide meaningful diversification benefits, as they tend to move independently from large caps and global equities.
“The Russell 2000 Index has historically had a weaker connection to broader global markets, meaning it can perform differently from large multinational companies. This makes small caps particularly valuable in a portfolio, offering exposure to domestic US growth while reducing reliance on major global market trends,” Leung wrote.
“For Australian investors, this diversification is even more relevant given the high concentration of financial and resource stocks in the local equity market.”
RSSL, which marks the firm’s 42nd product launched in Australia, will accompany existing funds such as FANG and U100, which also provide exposure to US markets.
Notably, in December, its ETF FANG surpassed $1 billion in size.
The fund, which aims to invest in 10 companies at the leading edge of next-generation technology, has been one of the company’s and the broader ETF market’s leading products in terms of performance.
