Mind you, a fund of a certain size group would have 80% of its portfolio of that particular market cap stock. There would often be a few small percentages of the portfolio allocated in other market cap levels. For example, a large-cap fund wouldn’t be 100% large-cap, it can have 20% or less in, say, small-cap stocks.
Large-cap funds:
It consists predominantly of companies with a market value of $10 billion or more. This could be of companies like Apple, Alphabet, Nvidia, and more.
This fund is particularly useful for people who want to see their money grow, but not too volatile. So, if you want to see your money grow alongside the market while still keeping your peace of mind, this would usually be the go-to choice.
Why is that the case? Large-cap companies are usually more stable, and they would gradually grow or inch lower, but it would often be nothing too significant.
Mid-cap funds:
It consists predominantly of companies with a market value of between $2 billion and $10 billion. This fund is particularly useful for people who want to see their money grow and take slightly more risk.
It would be more volatile than large-cap funds are, but not as volatile as small-cap and micro-cap ones.
Small-cap funds:
It consists predominantly of companies with market value between $250 million and $2 billion. It would be more volatile than large-cap and mid-cap funds are, but less volatile than micro-cap.
Micro-cap funds:
This is the most volatile of them all. This type of fund is good if you’re seeking more risk (and more returns), while also saving yourself the trouble of having to do market research. Of course, you still have to do a bit of research to choose the best fund amongst the bunch.
Hybrid-cap funds:
This would be a fund that mixes different cap-level stocks into its portfolio, e.g. large-cap and mid-cap. The purpose of this is to increase/decrease the volatility of the portfolio, but not too much.
If you go for large-cap, the volatility might be low, while mid-cap might be too high for your liking. So, what do you do? Take a little bit of both.