Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube

  Micro-Caps Have Been The Sweet Spot In The Small-Cap Space
Posted Under: Themes


View from the Observation Deck 

  1. While there is no official set of parameters that define a micro-capitalization (micro-cap) stock, the U.S. Securities and Exchange Commission (SEC) defines them as companies with a market value of less than $250 million. 
  2. The SEC refers to companies with market capitalizations below $50 million as "nano-cap" stocks. Due to their low valuations levels, micro-cap companies tend to receive little attention from equity analysts, according to U.S. News & World Report.
  3. This shifts more of the fact finding onus to the investor. For those investors not interested in performing such research, there are various products they can turn to.
  4. As indicated in the chart, the Dow Jones Micro-Cap Index posted higher average annualized total returns than the Russell 2000 Index (small-caps) in all but one (10-Year) of the time periods featured.
  5. For the 15-Year period ended 10/30/15, the Dow Jones Micro-Cap Index posted an average annualized total return of 11.64%, compared to 7.23% for the Russell 2000 Index.
  6. What is interesting about this particular time period is that real U.S. GDP growth averaged only 1.8% from 9/30/00 through 9/30/15 (GDP posted on a quarterly basis), according to data from the Bureau of Economic Analysis.
  7. Micro-cap companies tend not to be multinational in scope, so they are more heavily influenced by the state of the U.S. economy, which currently looks attractive compared to most foreign economies, in our opinion.

The chart and performance data referenced are for illustrative purposes only and not indicative of any actual investment. The index performance data excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. There can be no assurance that any of the projections cited will occur. The Dow Jones Select Micro-Cap Index represents the "investable" portion of U.S. micro-cap companies traded on the major U.S. exchanges.  The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the total market capitalization of the Russell 3000.  

To Download a PDF of this post, please click here.

Posted on Tuesday, November 17, 2015 @ 3:10 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Weekly Market Commentary
Weekly Market Watch
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

Stocks Week Ended Nov. 13, 2015
US Economy and Credit Markets Week Ended Nov. 13, 2015
Snapshot Of Bond Valuations
S&P 500 Index Top-Line Growth Estimates
Stocks Week Ended Nov. 6, 2015
US Economy and Credit Markets Week Ended Nov. 6, 2015
A Snapshot Of European Equities
A Snapshot Of Moving Averages
Stocks Week Ended October 30, 2015
US Economy and Credit Markets Week Ended October 30, 2015
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2020 All rights reserved.