Long-term it has paid to own stocks.
Ibbotson Associates, Chicago, calculates that $1 invested in large-company stocks at the end of 1925 would have grown to $2,285 by the end of 2003, assuming no taxes and dividend reinvestment.
Over that same time period, $1 invested in small-company stocks would have grown to $10,954, according to Ibbotson.
The small-company stocks tracked by Ibbotson are those companies in the bottom 20 percent of all companies, in terms of market value. In other words, the top performers have been micro-caps.
There are micro-cap funds, and they’ve been spectacular performers the past three or four years. When the economy was struggling, smaller and more nimble companies were more likely to keep growing, and their stocks did nicely.
Unfortunately, micro-cap funds try to avoid growing too large so many of them have closed to new investors after they’ve been successful and attracted substantial capital. What’s left?
DFA US Micro Cap Fund, which is based on the same index that Ibbotson uses for its small-company returns. It’s open but DFA funds are available only through a selected group of financial advisors. If you’re interested, go to and click on “find an advisor.”
Gartmore Micro Cap Equity Fund, which was up 93 percent in 2003.
Satuit Capital Micro-Cap Fund, which returned 63 percent last year.
The newly-introduced Buffalo Micro Cap Fund
