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  • Many funds focus on companies within a specific market capitalization range – that is to say, companies of a specific size. For that reason, funds are often described as large-cap (or capitalization), mid-cap, or small-cap.

    The well-known, “blue-chip” companies in these funds generally have market capitalizations above $10 billion. Large-cap stocks typically are considered relatively stable, but with somewhat limited growth potential compared to smaller companies.

    Mid-cap companies generally have market caps ranging from approximately $3 billion to $10 billion. They might not be industry leaders – yet – and can sometimes be more volatile than large-caps. However, they have more potential for long-term growth.

    Small-cap companies are generally younger companies with market caps of less than $3 billion. Small-caps present the possibility of greater long-term capital appreciation. However, stocks of smaller companies are subject to more abrupt or erratic price movements than larger-company stocks.