Small-cap Stock Funds
Like other aggressive growth funds, small-cap stock funds are made up of companies selected for their potential to deliver a significant return on investment. But unlike basic growth funds, which can include promising companies of every size, small-cap stock funds invest only in companies below about $1 billion in market value [source: Fidelity].
Small-cap funds often include relatively new, unproven companies, as well as small companies developing new products or taking other steps to enter a new or growing market. Small-cap fund managers may also look for less risky bargain buys, such as established companies with a low market value (and an unusually low share price) due to a temporary market downturn.