Micro Cap Fund

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Micro Cap Fund

A mutual fund that invests predominately or exclusively in stocks with very low market capitalization. In general, a micro-cap company has a market capitalization of less than $250 million, but there is no hard-and-fast rule. Some brokerages or exchanges have slightly different definitions of micro-cap. Micro cap funds often contain new companies with strong growth potential; however, for this reason, they may be high risk.