is designed to identify companies from the universe of micro cap stocks with potentially superior risk-return profiles as determined by Zacks Investment Research.
The Index is an equal-dollar weighted index comprised of the between 300 and 500 highest-ranking stocks selected quarterly
from among the smallest 2,500 U.S. listed companies by market capitalization based on a proprietary multi-factor quantitative selection methodology.
The Index divisor was initially determined to yield the benchmark value of 1000.00 at the close of trading December 31, 1999.
For purposes of this fund, Zacks defines microcaps as capitalizations typically under $1 billion and often under $100 million.
Click here to see it at Bigcharts.com.
A fund based on it, from
Powershares Capital Management is now traded on the
AMEX under the symbol PZI. (See chart at right.)
In June, 2005, Dow Jones launched an index of 281 microcap stocks listed at the New York Stock Exchange, the American Stock Exchange and the Nasdaq Stock Market.
An ETF based on this index, the First Trust Dow Jones Select MicroCap
is traded on the AMEX under the stock symbol FDM. (See chart at right.)
Debuted March 2005. Unlike the other indices in this family, the Micro-Cap index is not split into Growth and Value indexes. It has a variable component number and is reviewed twice a year. It will include an OTCBB company which had listed first on a major exchange (but will not include it if it drops to the pinks). There are approx. 2,500 companies in the index and the average company has approx. $270 mil. market cap.
This index was launched in December 2004 by Morgan Stanley Capital International Inc. It is not clear exactly how many truly small companies are in this group or whether it includes OTCBB and Pink companies. MSCI targets for inclusion approx. the bottom 1.5% of the U.S. equity market capitalization and the index contains more than 1,400 companies.. To view details you will need to register at MSCI (for free).
A market capitalization-based index which privides an indication of performance for companies listed on the TSX Venture Exchange (Toronto, Canada). The index does not have a fixed number of companies. It is maintained by a committee comprised of members of S&P and the TSX Venture Exchange. The TSX Venture Exchange provides emerging companies with access to capital while offering investors a well-regulated market for making venture investments.
IBD maintains 3 interesting indices which are based on factors other than size.
They do not say that they exclude OTCBB companies; however, a sampling of their lists show mostly NASDAQ National
companies with several NYSE companies and a few NASDAQ Small Cap companies. They are:
The IBD 100 Index, IBD New America Index, and IBD 85-85 Index
This index is comprised of 30 stocks that were selected based on a host of qualitative and quantitative criteria, such as, but not limited to: (1) three month average trade volume, (2) market capitalization, (3) historical stock price, (4) shares outstanding, (5) estimated float, (6) sales, (7) operating history, and (8) sector/industry diversity. Due to the lack of trade activity, many notable OTCBB stocks were omitted.
When selected, the index's 50 stocks had market capitalizations mostly under $50 million, a price of $3 or less and a rating of 8 or higher under Bowser's system, which is balance sheet oriented. Mr. Bowser looks at current assets and current liabilities for an indication of working capital. He looks at earnings over last the five years, and current earnings are double weighted. He likes to see a small amount of debt or none at all. He also prefers companies with a small amount of shares outstanding who don't have many people buying. According to a Nov 2003 article (Daily Press - Knight Ridder/Tribune Business News), the index had a 101 percent increase compared to the Dow Jones Industrial Average's 8 percent decline during the same period of a little more than two years.
SMALL CAP INDICES:
These cover companies much larger than you may think!
There are a number of market indices which, by their names, look like they might apply to microcap companies, but really do not. A "Small Cap" index will not be relevant. A "Micro Cap" index might be.
The very interesting Morningstar.com Style-Box cube of indexes contains Value, Core, Growth and Overall sub-indexes for Small Cap, Mid Cap and Large Cap companies. Morningstar defines "Small Cap" as "US stocks that fall between 90th and 97th percentile in market capitalization of the investable universe. In aggregate, the Small Cap Index represents 7 percent of the investable universe." However, they also say "To be eligible for Morningstar's indexes, a stock must be...listed on the NYSE, the AMEX, or Nasdaq...."
The Wilshire Small Cap Index (symbol WSX), which you can see
at Bigcharts.com, is comprised of 250 companies with an average market capitalization of $933 million. An OTCBB company probably has a market capitalization of less than 100 mil. and even more likely only $1 mil. to $50 mil.
The S&P Small Cap 600 is chosen for market size, among other things, and contains companies much larger than those on the OTCBB.
The Zacks Small Cap Index was created to challenge the other small cap indexes in this list and is similar to them.
The Russell 2000 Index. complied by the Frank Russell Co. contains the 2000 smallest stocks in the Russell 3000 index. However, the Russell 3000 is comprised of the 3000 largest stocks in the US!
The new Morgan Stanley Emerging Growth Index (symbol EGI), posted at the Pacific Stock Exchange, covers 50 of the larger growth companies, not the very small ones.
The National Over-The-Counter Index (symbol XOC) posted at the Philadelphia Stock Exchange does not contain OTCBB companies. It has the 100 largest capitalized corporations whose stocks are traded on the NASDAQ exchange.
Additional useful figures:
Not exactly an index, but useful figures, can be found at OTCmarkets.com which gives you figures such as
the Total Share Volume and the Total Estimated Dollar Volume for OTC markets.
Also not exactly an index, but a chart including some microcap companies can be found on Wall-Street.com's Venture-Capital-Holding-Company Chart. The chart tracks the new breed of publicly traded Internet VC/Incubator type of companies, from largest through smallest.
AllStocks did a Study of the OTCBB which offers some interesting figures. Unfortunately, it runs only through 1998.
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