So, the higher the stock price, the larger the market cap of a firm. Many mutual funds invest in large cap, medium cap or small cap stocks. Large growth firms, in particular, have suffered more than that if we look at the last year. Perhaps these firms are not benefiting as much from the wave of Federal Reserve interest rate cuts because they are already overstocked in inventory and don't really need to borrow money for capital expenditures for expansion until they reduce current inventory. Large firms tend to be slower growing than small firms and generally have less risk.
Small firms are commonly more volatile than large firms.
The companies are not as well established or as financially stable. Typically, they don't even pay dividends. Often, you're investing in a new firm that is struggling to succeed when you invest in small-cap firms. Over the past year, their performance has been stellar. But, if you go back to the long bull market in the 1990s, you can see that their performance considerably lagged that of large firms.