SmallCap

Smallcap, or small-cap, refers to the category of companies with relatively small market capitalization and, as a result, shares offered on public markets. In financial markets, small-cap stocks are those of companies valued roughly between several hundred million and a few billion dollars, though thresholds vary by market and by index. In the United States, common definitions place small-cap roughly in the range of $300 million to $2 billion in market capitalization; firms below this range may be described as micro-cap, while those above move into mid-cap or large-cap territory.

Small-cap companies often offer higher growth potential than larger firms, but they also exhibit greater volatility and risk. They may have shorter operating histories, lower liquidity, and less access to capital. They can be more sensitive to economic downturns and changes in investor sentiment, and they typically receive less coverage from analysts, which can affect price discovery and width of bid-ask spreads. Diversification is important when including small-cap exposure in a portfolio.

Investors gain exposure through specialized funds and indices, such as small-cap index funds or exchange-traded funds. In the United States, the Russell 2000 and the S&P SmallCap 600 are widely used benchmarks. Active management strategies may focus on growth potential, value, or turnaround opportunities, but performance varies with market conditions and liquidity.

Outside finance, smallcap often refers to small caps in typography, or to font features that render uppercase letters at a reduced size for stylistic effect or emphasis. In typography, small caps are used for abbreviations and proper names in some styles.