What is the meaning of Small-capitalization (small-cap) stock?

Shares of relatively small publicly traded corporations, with a total market value-or capitalization-of less than $500 million, are typically considered small-capitalization, or small-cap, stocks. Stocks of companies with a capitalization of less than $150 million are considered microcap stocks. Small-cap stocks, which are tracked by the Russell 2000 Index, tend to be volatile, since they are issued by young, potentially fast-growing companies whose successes can't be guaranteed. Over the long term-though not in every period-small-cap stocks as a group have produced stronger returns than any other investment category. Mutual funds that invest in this type of stock are known as small-cap funds.