{"id":2051121,"date":"2016-07-14T16:11:53","date_gmt":"2016-07-14T10:41:53","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2051121"},"modified":"2016-07-14T16:11:53","modified_gmt":"2016-07-14T10:41:53","slug":"investing-micro-caps","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2016\/07\/14\/investing-micro-caps\/","title":{"rendered":"Investing in Micro-caps"},"content":{"rendered":"

The Size Factor<\/h3>\n

All things being equal, micro-caps outperform mega-caps in the long-run — investors are compensated for the higher systematic (business cycle) risk that they take when they invest in micro-cap stocks. One way to boost relative performance vs. a market-cap weighted index is to invest in an equal-weighted basket of stocks that are in the index. Alternately, investors can add a basket of micro-cap stocks to their portfolio to juice overall returns.<\/p>\n

Market-cap Deciles<\/h3>\n

We had discussed how we can divide the universe of listed stocks in deciles based on their free-float market cap here<\/a>. Given our ability to automate systematic investment strategies, we created an auto-rebalanced Theme each for every decile.<\/p>\n

Investors can now gain exposure to an equal-weight portfolio of micro caps by investing in the Decile 9 Theme<\/a> and mega-caps by investing in the Decile 0 Theme<\/a>. Returns and risk go down as you climb up the market-cap ladder. Our Market Dashboard<\/a> gives an idea of how returns have been distributed across the deciles:<\/p>\n

\"decile<\/p>\n

Notice how the drawdowns are deeper with micro-caps:
\n\"decile<\/p>\n

Investors who whethered the steeper drawdowns of micro-caps have experienced returns an order of magnitude larger than mega-cap investors. Check out the ‘Size Factor’ in our Investment Themes<\/a> page for other Market-cap based Themes.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Size Factor All things being equal, micro-caps outperform mega-caps in the long-run — investors are compensated for the higher systematic (business cycle) risk that they take when they invest in micro-cap stocks. One way to boost relative performance vs. a market-cap weighted index is to invest in an equal-weighted basket of stocks that are … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[3731,2761,2541],"class_list":["post-2051121","post","type-post","status-publish","format-standard","hentry","category-investing-insight","category-your-money","tag-decile","tag-quant","tag-theme","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2051121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2051121"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2051121\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2051121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2051121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2051121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}