Small Cap

Loading the player...

What is 'Small Cap'

Refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion.


One of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer's outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price.

Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition can vary between brokerage houses.

  1. Large Cap - Big Cap

    A term used by the investment community to refer to companies ...
  2. Micro Cap

    A publicly traded company in the United States that has a market ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  4. Nano Cap

    Small public companies with a market capitalization below $5 ...
  5. Mid Cap

    A company with a market capitalization between $2 and $10 billion.
  6. Mega Cap

    The biggest companies in the investment universe, as measured ...
Related Articles
  1. Mutual Funds & ETFs

    Europe Equity ETFs to Date 2016 Performance Review (EWN, DFE)

    Discover how Europe exchange-traded funds (ETFs) are performing year-to-date in 2016, and learn which are the best and worst performers.
  2. Mutual Funds & ETFs

    USAGX: Portfolio Trends in 2016

    Evaluate the composition of the USAA Precious Metals and Minerals Fund, and discover how its makeup evolved between March 2015 and March 2016.
  3. Mutual Funds & ETFs

    SGENX: Portfolio Trends in 2016

    Evaluate the composition of the First Eagle Global Fund, and study how the fund's makeup has evolved between March 2015 and March 2016.
  4. Investing News

    Oppenheimer: Investment Manager Highlight (OPY)

    Learn more about OppenheimerFunds, Inc., a leading provider of mutual funds across domestic stock, international stock, municipal bonds and taxable bonds.
  5. Mutual Funds & ETFs

    3 Expensive Growth Mutual Funds Worth Your While (ERSMX, NBMBX)

    Learn about mid-cap and large-cap growth stock funds that have higher costs but attractive historical performance as well as experienced management teams.
  6. Mutual Funds & ETFs

    ANCFX: Portfolio Trends in 2016

    Evaluate the composition of the American Funds Fundamental Investors fund, and determine how the fund's makeup has evolved between March 2015 and March 2016.
  7. Mutual Funds & ETFs

    ETF Flows: Emerging Markets Equity ETFs Winning Assets (EEM, IEMG)

    Learn about five exchange-traded funds that invest in emerging market equities and experienced large year-to-date capital inflows as of March 4, 2016.
  8. Mutual Funds & ETFs

    DODGX: Dodge & Cox Stock Fund Top 5 Holdings Analysis

    Take a look at the top five portfolio holdings of the Dodge & Cox Stock Fund, along with an overview of this Morningstar analyst gold-rated fund.
  9. Mutual Funds & ETFs

    The Top 3 Inverse Oil ETFs for 2016 (DNO, DTO)

    Discover how inverse oil ETFs can be used to play price declines on oil, as well as the reason why these funds are not suitable for a long-term hold.
  10. Mutual Funds & ETFs

    5 U.S. Equity Mutual Funds for Steady Returns (TWEIX, FKUTX)

    Discover five highly rated mutual funds that have long histories, are stable, and have market-beating returns. All of these funds have long-tenured managers.
  1. What is an appropriate small cap mutual fund fee?

    Figure out the industry average fee for small-cap mutual funds, and determine the appropriate fee an investor should pay ... Read Answer >>
  2. What are the most important equity market indexes?

    Discover the most important equity market indexes. Stock market indexes are tools to evaluate the performance of the stock ... Read Answer >>
  3. What price-to-earnings ratio is average in the aerospace sector?

    Find out what the average price-to-earnings ratio is for companies in the aerospace sector and the importance of comparing ... Read Answer >>
  4. Which segment of the oil and gas sector is most vulnerable if oil prices drop?

    Learn which segment of the oil and gas sector is most vulnerable when oil prices drop. Oil prices dictate sentiment which ... Read Answer >>
  5. How do no-load funds typically perform relative to load funds?

    Understand the difference between no-load mutual funds and funds that carry a sales load, and learn which of the two has ... Read Answer >>
  6. What is the difference between a penny stock and a small cap stock?

    Learn about penny stocks and small-cap stocks, how stocks are classified as these types, and the difference between penny ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center