Term · Market & Classification
Micro Cap
In briefA micro cap is a listed company whose market capitalisation lies below that of a typical small cap; the thresholds differ by index and provider. It is the focus of this toolkit and is associated with very low liquidity and high volatility.
Definition
A listed company with an even smaller market capitalisation than a typical small cap.
How it is calculated
Formula. Defined via market-capitalisation thresholds that vary by index/provider.
Why it matters for small caps
The most common category in the focus of this toolkit – associated with especially low liquidity and high volatility.
Common misreadings
- It is often used synonymously with 'small cap', although the liquidity and risk profiles can differ significantly.
In the process
Frequently asked
What is a micro cap?
It is a very small listed company below the usual small-cap size. The exact delineation depends on the respective threshold.
How is a micro cap classified?
The classification is based on market-capitalisation thresholds that differ between indices and data providers. There is no fixed, universally valid value.
Why should micro and small caps not be equated?
The two are often used synonymously, although liquidity and risk profiles can differ significantly. Micro caps are usually harder to trade and more prone to fluctuations.
Related terms
Sources
Primary
MSCI – Small Cap Indexes
https://www.msci.com/indexes/group/small-cap-indexes
https://www.msci.com/indexes/group/small-cap-indexes
Methodology
FTSE Russell – Russell US Indexes
https://www.lseg.com/en/ftse-russell/indices/russell-us
https://www.lseg.com/en/ftse-russell/indices/russell-us
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.