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Balancing Market Capitalization
 
Classifying by market capitalization
Stocks can be classified by the market capitalization of the underlying company.
Morningstar, a leading third-party provider of mutual fund investment information, defines a company's capitalization size using three categories: large cap stocks, small cap stocks1, and in between, mid-cap stocks. Morningstar resets the boundaries of these definitions periodically by examining the relative sizes of their database of stocks.
Over time these three categories have demonstrated different levels of volatility and investment returns. Looking at the market capitalization focus of funds is another way to examine the diversification in your portfolio.
Capitalization size Definition
 
 
 
Performance Trends
As with growth and value stocks, performance of each market capitalization sector has fluctuated in the past.3 Here's a historical look at cyclical performance of small, mid and large cap stocks since 1980:4
Best <--------------------------> Worst       
1980 Small Mid Large
1981 Mid Small Large
1982 Small Mid Large
1983 Small Mid Large
1984 Large Mid Small
1985 Large Mid Small
1986 Large Mid Small
1987 Large Mid Small
1988 Small Mid Large
1989 Large Mid Small
1990 Large Mid Small
1991 Small Mid Large
1992 Small Mid Large
1993 Small Mid Large
1994 Large Small Mid
1995 Large Mid Small
1996 Large Mid Small
1997 Large Mid Small
1998 Large Mid Small
1999 Small Large Mid
2000 Mid Small Large
2001 Small Mid Large
2002 Mid Small Large
2003 Small Mid Large
2004 Mid Small Large
2005 Mid Large Small
1 Securities of small, less well known companies may be more volatile than those of larger companies.
2 Data provided by FMR,Co. December 2005.
Data provided by Morningstar, Inc.© 2005. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., and may not be copied or redistributed for any purpose. Fidelity and Morningstar are not affiliates and neither represents or warrants the data contained herein to be accurate, correct, complete or timely and neither shall be responsible for the results obtained from its use. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933.
3 Past performance is no guarantee of future results.
4 Source: Frank Russell Company, Fidelity Management & Research Company, 12/31/05. Note: Based on total returns. Small=Russell 2000® Index, Mid=Russell Mid Cap Index, Large= Russell 1000® Index.
 

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