Small cap stocks and companies can get overlooked by investors, as their large-cap counterparts may block the view. But good things come in small packages and exchange traded funds (ETFs) are a great tool to help get good small-cap exposure.
Despite the some of the criticisms lobbed at small caps, such as that they’re high-risk or lack quality, they have many good points. By definition, a small cap company has a market capitalization of $250 million to $2 billion. Those with a market cap below $250 million are referred to as micro-caps.
There are two benefits to using ETFs in order to get your small-cap exposure:
1. Although small cap companies can be tough to research, ETFs can do the legwork for you;