Large Cap Stocks

Small Cap Stocks vs. Large Cap Stocks: An Overview

Historically, market capitalization, defined as the value of all outstanding shares of a corporation, has an inverse or opposite relationship to both risk and return. On average, large-cap corporations—those with market capitalizations of US$10 billion and greater—tend to grow more slowly than mid-cap companies. Mid-cap companies are those with capitalization between $2 and $10 billion, while small-cap corporations have between $300 million and $2 billion.1 These definitions of large cap and small cap differ slightly between the brokerage houses, and the dividing lines have shifted over time. The differing definitions are relatively superficial and only matter for the companies that are on the borderlines.

KEY TAKEAWAYS

• Publicly traded companies are often segmented by their market capitalization – that is, the total value of their shares in the market,
• Large-cap corporations, or those with larger market capitalizations of $10 billion or more, tend to grow more slowly than small caps, which have values between $300 million and $2 billion.1
• Large caps tend to be more mature companies, and so are less volatile during rough markets as investors fly to quality and become more risk-averse.
• Small caps and midcaps are more affordable than large caps, but volatility in these markets points to large-cap leadership in 2019.