That's why small stocks deserve to be part of a well-balanced portfolio. They are often good performers when large stocks are not. Small stock fund managers have the opportunity to find some great growth companies before they get big. The most popular index for small cap stocks is the Russell 2000. Everyone has the same information.
Many experts agree.
Small cap investing is a specialized field where the best active managers beat the small cap index funds on a consistent basis. The largest mutual funds are often limited to investing in large cap stocks. They cannot invest in small caps because their sheer size would require them to buy all the shares of individual small companies. This lack of liquidity is a reason why many of the best small cap funds are closed to new investors, so they won't get too big to keep investing in small companies. First, the names are unfamiliar.