Small cap growth is the subset of stocks that covers smaller listed companies in any given market that are also considered overpriced relative to their fundamentals.
Index Funds
Target Market
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Notes Definitions
- +SCB — Total market fund that includes small caps (85% LCB + 15% SCB)
- +EM — Global fund that includes emerging markets (~90% DEV + 10% EM)
- -CAN — Excludes Canada (or other specified country normally in the index)
- Acc — Accumulating
- Dist — Distributing
Assume there are errors and always do your own research. No listings or links are sponsored. Because they track similar indices, all funds should have similar returns before fees.
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Alternatives
Other options when no small cap growth funds are available
- USA Small Cap Growth — Because it is a large market, there tend to me more small cap funds in the US than in other countries.
- Small Cap Blend — Even when there are not growth or value versions, blend funds are more common.
Definition
The Portfolio Charts small cap growth data tracks the smallest 85th through 98th percentile of a given market sorted by capitalization. The last 2% is generally considered micro caps and is excluded.
Some index providers define small caps using a company count instead of market percentages. Because of the way both methods are based on historical standards in the data, they should still be in the same ballpark.
“Growth” means that the index focuses on the half of the market considered overpriced relative to company fundamentals. Even if the entire market is undervalued or overvalued, the fund will still hold the relatively undervalued half of the market.
Small cap growth has been called the “black hole of investing”, as its construction naturally allows the best high-growth companies to eventually leave the index once it qualifies as a large cap. That negative connotation is debatable, but the reality of how it works is straightforward.
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Portfolios
Portfolios that include small cap growth
