Cap It Off: Why Going Small Could Mean Winning Big

With market volatility and interest rate shifts in play, small-cap funds are gaining investor attention for their growth potential. Here's how to navigate them wisely.

Key highlights:

1. Small-cap stocks typically have market capitalizations between $300 million and $2 billion and are tracked by indices like Russell 2000 and S&P 600.
2. These funds offer higher growth potential due to their early-stage nature but come with increased volatility and limited liquidity.
3. Ideal for investors with long-term horizons and strong risk tolerance.
4. Strategies include dollar-cost averaging, combining with large-cap holdings, and using ETFs for diversification.
5. Look for companies with strong fundamentals, competitive advantages, and solid management teams.
6. Timing matters: periods of economic recovery or anticipated rate cuts often favor small-cap performance.

Sources: Forbes, MarketBeat, Morningstar.