Meme stocks have driven the small-cap benchmark Russell 2000 value index up by double digits to outpace an index with companies predicted to register significant growth, WSJ reported.
- The Russell 2000 value index is up 21% so far this year, outpacing the Russell 200 growth index which climbed by only 5%. This marks the biggest margin in nine years since 2002.
- The growth is mainly due to meme stocks such as AMC Entertainment Holdings Inc. which has surged by over 2,000% this year. GameStop Corp. also served as the second-biggest contributor to the index this year, despite being dropped from the index in June.
- The Russell 2000 value index is updated annually, with the contribution of AMC on the index’s growth indicating that the meme stock frenzy has disrupted traditional investing as a representation of market demand.
- AMC is the biggest asset holding in the $16-billion iShares Russell 2000 Value ETF, and the $1-billion Vanguard Russell 2000 Value ETF. Its $22-billion market value in September has made it nearly 14 times larger than the iShares fund’s average holding.
Investors believe AMC shares are already pricey, following the significant gains recorded this year. AMC is up 3.07%, while GME is up 2.65%.