GLOSSARY TERM
Market Capitalization (Large/Mid/Small Cap)
Market capitalization or market cap, means the total market value of a company’s shares. It is used to describe the size of a company.
What does this mean in practice?
A company’s market cap is calculated by multiplying its share price by the number of shares outstanding. Companies are often grouped as large-cap, mid-cap or small-cap. Large-cap companies are usually bigger and more established. Small-cap companies are smaller and may have more room to grow, but they can also be more volatile. Mid-cap companies sit somewhere in between.
Example
If a company has 1 billion shares and each share is worth €50, its market capitalization is €50 billion. That would place it in the large-cap category.
Why it matters
Market cap helps you understand what kind of companies a fund or ETF invests in. Different company sizes can behave differently, so this affects both risk and return.
Continue your path
Ready for the next step? Follow the Start Here path.
Go to Start Here