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#Micro cap stocks definition professional
Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. This article is intended to provide general information of an educational nature only. Some exchange traded funds provide exposure to groups of companies of a specific size, such as small or large cap. Small cap companies are often considered as growth stocks, offering the potential for high growth in the long term, but also carrying more risk.
Large cap companies are typically considered more stable and less risky because they are established and often pay dividends. Companies in this index generally have a market cap of a few hundred million dollars to $2 billion. It’s used as a benchmark for small cap Australian shares. The S&P/ASX Small Ordinaries index (XSO) represents those smaller members of the S&P/ASX300 index. These are all those companies that sit outside of the largest 100 on the ASX by market cap. The market cap of these securities generally ranges between $2 billion to $10 billion. The S&P/ASX MidCap 50 (XMD) is comprised of the members of the S&P/ASX 100, excluding those in the S&P/ASX 50. These are the next 50 biggest companies on the ASX in terms of market cap. The market cap of these securities generally ranges between tens of billions to over $100 billion. The S&P/ASX 50 (AFL) index represents the top 50 companies. These are the biggest companies on the ASX in terms of market cap. Below, are some examples based on the S&P/ASX indices in Australian dollar millions.
There is no universal definition for large, medium, or small cap companies and different markets divide them according to different characteristics.
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