How do you define market capitalisation bands?

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.