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Capitalization A capitalization fund is a mutual fund (a collective investment arrangement) which focuses on purchasing stocks in companies of a particular size as calculated by the company's market capitalization. This is a measure of corporate size determined by multiplying the current company stock price by the number of outstanding shares. Capitalization mutual funds are designated as investing in micro-cap, small-cap, mid-cap, and large-cap stocks. The capitalization of these funds would respectively equal: under $100 million, under $1 billion, between $1 billion to $5 billion, and in excess of $5 billion. (The term "blue chip" is a common synonym for large-cap stocks whereas micro-cap stocks are often referred to as "penny stock." Occasionally stocks will also be referred to as nano-cap which is a valuation under $50 million in capitalization.) Although there are no hard and set definitions for the division of capitalization, these figures are the rough working norm of the trading world. More Terms Explained here |
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