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What is a small cap fund?
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3rd Nov 2009 by James Brumley
A small cap fund is the shortened way of describing a stock mutual fund that specifically invests in smaller companies. Most companies with a market capitalization (outstanding shares multiplied by share price) of less than $2 billion but more than $300 million are considered small caps, though that definition is not absolute. This particular category of stocks is believed by some to offer greater opportunity than large cap stocks since these smaller organizations are yet-to-be-discovered, or have significant growth potential. Though small cap stocks in general have outperformed large caps over the past several decades, not all small cap funds have necessarily done so.
A small cap fund is the shortened way of describing a stock mutual fund that specifically invests in smaller companies. Most companies with a market capitalization (outstanding shares multiplied by share price) of less than $2 billion but more than $300 million are considered small caps, though that definition is not absolute. This particular category of stocks is believed by some to offer greater opportunity than large cap stocks since these smaller organizations are yet-to-be-discovered, or have significant growth potential. Though small cap stocks in general have outperformed large caps over the past several decades, not all small cap funds have necessarily done so.
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2nd Nov 2009 In Investing
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