Micro Caps - A Distinct Segment
Jan 26, 2011
A few large asset owners have expressed a preference for an expanded opportunity set that goes beyond the traditional equity universe comprised of large, mid, and small capitalization companies. These investors have typically focused on the domestic equity market. In order to address these needs, MSCI recently launched the MSCI All Cap Indices, which aim to provide comprehensive yet accessible coverage of all capitalization segments. The MSCI All Cap Indices include micro cap securities across 24 Developed Markets and complement the existing MSCI Investable Market Indices (IMI), which cover large, mid and small cap companies.
The universe of micro cap securities represents a dynamic and evolving segment of the global equity landscape. Although micro cap securities may be perceived as more risky compared to their large cap counterparts, they have differentiated performance characteristics from other size segments and may provide an opportunity for portfolio diversification. The inclusion of the micro cap segment within MSCI All Cap Indices nearly doubles the investment opportunity set for investors and can help to address the evolving needs of global investors. This research bulletin presents the distinct characteristics of the micro cap segment and contrasts it with the investable market (IMI) segments.