What is the microcap index?

The microcap index is a statistical measurement of stock performance called "microcaps" with low levels of market capitalization. Shares are generally classified as microcaps, if their market capitalization, which is the amount of outstanding shares owned by investors by multiplied shares, is between $ 50 million in the US (USD) and $ 300 million. There are several different indices that take a group of shares and on average their performance, devoted to various grouping of microcap stocks. Investors use the microcap index to monitor the overall performance of small shares, which are often very volatile as individual investments. These investors looking for negotiations can instead focus on the supply of microcaps that issue companies with small to proven results. These companies are usually of a question and represent high potential profits for investors if they can improve their wealth and reach the level of the main players on the market. The microcap index keeps cards on these small stocks asgroup.

It is important to realize that shares that contain one microcap index may slightly differ in another group of microcaps. For example, some indices are based on supplies from a certain area of ​​the world. Other indices are based on their inclusions at the minimum level of market capitalization, while others include only shares traded by the stock exchange, unlike the so -called "over counter" shares.

Regardless of the qualifications used, the microcap index takes the market prices of all shares inside, adds and distributes this number with the total amount of shares included. The number created is often a small consequence in itself, aleinvestators can compare it to previous sums to see if the trend is evolving. The positive trend in the shares of the microcap may encourage the investor to take advantage of some of these smaller companies.

Another way the investor can use the microcap index is investing in a fund that Je bound directly with the performance of a particular index. These funds are essentially mutual funds that associate capital from various investors, who then participate in the profit and loss of securities contained in the fund. When the index works well, investors in a fund bound to this particular index will benefit from the benefits.