A company with a market capitalization typically between $300 million and $2 billion, representing smaller and often faster-growing public companies.
Small-cap stocks are tracked by indices like the Russell 2000 and S&P 600. They have historically delivered higher long-term returns than large-caps (the "small-cap premium"), averaging roughly 2% per year more, though with significantly higher volatility. Small-caps tend to outperform during economic recoveries and underperform during downturns. They offer less analyst coverage, lower liquidity, and wider bid-ask spreads, which creates both risk and opportunity. Small-cap value stocks have been among the best-performing asset classes over very long periods, according to research by Fama and French.