Size Indices

Size indices refer to stock market indices that categorize companies based on their market capitalization, such as small-cap, mid-cap, and large-cap indices. These indices track the performance of companies within a certain size range, offering investors a way to compare the performance of different market segments. Common size indices include the S&P 500 (large-cap), the Russell 2000 (small-cap), and the S&P MidCap 400.

Example

An investor might track the Russell 2000 index to gauge the performance of small-cap stocks, which tend to have higher growth potential but greater volatility compared to large-cap stocks.

Key points

• Indices that classify companies by market capitalization.

• Includes large-cap, mid-cap, and small-cap indices.

• Provides insights into the performance of different market segments.

Quick Answers to Curious Questions

Size indices help investors focus on specific market segments, such as small-cap or large-cap stocks, based on their risk tolerance and investment goals.

Small-cap indices typically offer higher growth potential but come with more volatility, while large-cap indices are generally more stable with lower growth rates.

By investing across small, mid, and large-cap indices, investors can achieve a balance of growth potential and stability in their portfolios.