Characteristics:

• Market cap is less than 1 billion
• Historically provides higher returns also higher loss when Market suffers – More risk / more reward
• Higher liquidity risk – you may not be able to find a buyer when conditions deteriorate. Less volume traded
• Followed by less people so you may have less information available to make decisions with
• High volatility
• Small Cap Value based strategies have performed better in comparison to growth based strategies

Small Cap Investing Strategies :

• Invest in small caps by investing in a small cap ETF or Index Fund . Russell 2000 Index is an example of a small cap index .

• Research small caps and choose individual stocks – A lot more effort and higher risk/reward

My experience:

I have held few small caps over the period I have invested. You can make a large amount of money as well as lose it all in one trade .

I would recommend sticking to an ETF or index fund for small caps unless you have sufficient time to research in depth individual companies and industries .