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10 Aggressive Investments


5
Micro-cap Stock Funds

As their name implies, micro-cap stock funds invest in companies that aren't even big enough to be considered small-caps, targeting companies below about $250 million to $500 million in value [sources: Wherry, Fidelity].

While micro-cap stocks carry a higher risk than small-caps, micro-cap investors point out that the price of entry is low and the potential for payoff is almost unlimited. A micro-cap stock can produce huge returns for investors if the small company is acquired by a larger company, but if it moves up to small-cap size and outgrows the micro-cap fund on its own, the investor's returns are limited to the growth from micro-cap to small-cap, as the fund manager will need to sell shares in any companies that no longer meet the fund's own micro-cap definition [source: Caplinger].


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