Small-Cap Stock
Also called: small cap, small-capitalisation stocks, micro-cap
A small-cap stock is a company with a relatively small market value — roughly $300m to $2bn under common US definitions. Small caps have historically delivered higher long-run returns with higher volatility, the 'size premium' that underpins factor investing, though the premium has been weak in recent decades. They're less liquid, less researched and more likely to fail, which is precisely the argument for owning them as a diversified index rather than individually.