Micro-Cap Equity

Micro-cap equity funds and ETFs are funds that own the smallest stocks... Micro-cap equity funds and ETFs are funds that own the smallest stocks in the fund universe. These tend to be stocks with market capitalizations less than US$300 million, although depending on the fund, that number can rise to US$500 million. These funds can cover a wide range of sectors. Typically, these funds are actively managed, although some can track indices. Investors gravitate to micro-caps because of the possibility of significantly greater returns than large- caps, mid-caps, and even small-caps. These stocks are often running in the pre-profitability phase and burning cash as they seek high levels of growth. Depending on its success, today’s micro-cap stock can be tomorrow’s small-cap (or even better). Fund managers that specialize in micro-caps attempt to discern which of the smallest companies on the market have the potential for explosive growth in the years ahead. These funds are only appropriate for the most aggressive investors. There is a significant risk of capital loss in these stocks, although a diversified portfolio of them does reduce the overall risk to an investor. Last Updated: 06/04/2026 View more View less

Micro-cap equity funds and ETFs are funds that own the smallest stocks in the fund universe. These tend to be stocks with market capitalizations less than US$300 million, although depending on the fund,... Micro-cap equity funds and ETFs are funds that own the smallest stocks in the fund universe. These tend to be stocks with market capitalizations less than US$300 million, although depending on the fund, that number can rise to US$500 million. These funds can cover a wide range of sectors. Typically, these funds are actively managed, although some can track indices. Investors gravitate to micro-caps because of the possibility of significantly greater returns than large- caps, mid-caps, and even small-caps. These stocks are often running in the pre-profitability phase and burning cash as they seek high levels of growth. Depending on its success, today’s micro-cap stock can be tomorrow’s small-cap (or even better). Fund managers that specialize in micro-caps attempt to discern which of the smallest companies on the market have the potential for explosive growth in the years ahead. These funds are only appropriate for the most aggressive investors. There is a significant risk of capital loss in these stocks, although a diversified portfolio of them does reduce the overall risk to an investor. Last Updated: 06/04/2026 View more View less