Term · Market & Classification
Small Cap
In briefA small cap is a listed company whose market capitalisation is considered comparatively small within a given segment. It forms the target group of this process; whether the six-step approach is worthwhile at all depends on the chosen size threshold.
Definition
A listed company with a comparatively low market capitalisation within a defined market segment.
How it is calculated
Formula. Defined via market-capitalisation thresholds that vary by index/provider.
Why it matters for small caps
It defines the entire target group of this process - the threshold determines whether the 6-step process can be sensibly applied at all.
Common misreadings
- The precise threshold is mistakenly assumed to be a fixed, universal value, although it differs by index and provider.
In the process
Frequently asked
What is a small cap?
It is a smaller listed company with a relatively low market capitalisation. Where exactly the boundary lies depends on the respective market segment.
How is a small cap delimited?
The classification is made via market-capitalisation thresholds that vary by index and provider. A uniform, universal value does not exist.
Why is the small-cap boundary not fixed?
It is often misunderstood as a fixed value, but it differs by index and data provider. The definition is therefore relative, not absolute.
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
STOXX – Guide to the DAX Equity Indices
https://www.dax-indices.com/document/Resources/Guides/DAX\_Equity\_Indices.pdf
https://www.dax-indices.com/document/Resources/Guides/DAX\_Equity\_Indices.pdf
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.