Small-Cap ETF Definition

Learn the definition of small-cap etf and other ETF terminology from the glossary.

Reviewed by: Staff
Edited by: Staff

Learn more about Small-Cap ETF

A Small-Cap ETF specializes in investing in stocks of small-capitalization companies, typically with market caps between $250 million and $2 billion in market cap. These ETFs cater to investors seeking exposure to the potential growth of smaller, less-established firms. While small-cap stocks may exhibit higher volatility, Small-Cap ETFs offer diversification benefits and the opportunity for investors to participate in the higher-risk, higher-reward segment of the equity market. By providing a focused and targeted investment strategy, Small-Cap ETFs contribute to portfolio diversification, allowing investors to tailor their risk exposure based on their risk tolerance and investment objectives within the context of the broader market.

Related Terms

ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.