Micro Cap Fund

(redirected from Micro-Cap Funds)

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 ?
Most micro-cap funds try to avoid growing too large so they frequently close to new investors after they've successfully attracted substantial capital.
"The companies in small-cap funds aren't quite as risky as micro-caps because small-caps can own companies with market caps of up to $1 billion." Micro-cap funds generally restrict holdings to companies with a market cap of $350 million or less.
Says Pagliarini, "Our current favorite, Third Avenue Small Cap Value (TASCX), usually keeps 10% to 20% of its assets in micro-caps so investors have some exposure to those stocks." Lutton, too, says that while there are no micro-cap funds on her "pick" list, she favors Royce Total Return (RYTRX), a small-cap fund that may hold around 15% of its assets in micro-caps.