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.
References in periodicals archive ?
Similarly, Ron Pearson, president and CEO of Beach Financial Advisory Service in Virginia Beach, Virginia, says that investors should limit micro-cap fund holdings to less than 5% of their portfolio: "[With that percentage], you reduce the risks of investing in micro-caps.
But such thinking disturbs Robert Gardiner, portfolio manager of the Wasatch Micro-Cap Fund, which was ranked first in its category by Lipper Analytical with a three-year annual return of 25 percent.