We have researched global markets to find the convention for market capitalisation bands. While the USA tends to use inflated terminology for capitalisation bands as many stocks can reach mega-cap territory, the rest of the world, and many index providers, are largely in agreement and use very similar ratings.
We have used a heuristic to calculate size groups which is hard-coded in GBP at different cutoffs. Our own definitions (in GBP) are as follows:
- Largecap: £2.5 Bn and higher, i.e. FTSE 100 up
- Midcap: £350m - £2.5 Bn, i.e. FTSE 350 and above
- Smallcap: £50m - £350m, i.e. the FTSE SmallCap Index
- Microcap: £0m - £50m and less.
While there are arguments to include additional levels for Mega Caps and Nano Caps, we felt a four tiered system aligned more closely with the indices provided by FTSE, S&P and others, and also proves more useful for filtering and for portfolio diversification purposes.