Small-cap funds can be a great way to gain exposure to companies with great growth potential while enhancing diversification in your portfolio.
When it comes to the world of investing, you have your big names like Amazon, Alphabet (Google), and Meta (Facebook). These are three of what Wall Street refers to as the Magnificent Seven. These are some of the most established companies in the country. But what about the next big thing? These companies didn’t necessarily start out as the juggernauts they are today. So who’s to say a smaller company won’t come round to earn its place among the elite?
To find these companies, many investors turn to small-cap funds.
What Are Small-Cap Funds?
Small-cap funds invest in small-cap stocks. Small-cap companies usually have market capitalizations between $300 million and $2 billion. Market capitalization is calculated by multiplying the total number of company-issued shares by the market price of a single share.
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