How to Invest in Small and mid cap stocks
Last updated July 2026
Short answer
You can invest in Small and mid cap stocks by buying the individual stocks that fit the thesis (CELH, CROX, CRSP), holding an ETF proxy like VB, IJR, VO, or building a focused Small and mid cap stocks portfolio. Smaller companies occupy a different part of the market for structural reasons. Fewer analysts cover them, index funds hold less of them, and large institutions often cannot buy them at meaningful size, which historically left more room for mispricing. They also have more room to grow, since doubling revenue is arithmetically easier from a small base. The other side is real: weaker balance sheets, thinner liquidity, greater sensitivity to credit conditions, and far deeper drawdowns.
What gets a stock into the Small and mid cap stocks theme?
Listed companies below the largest market capitalisation tiers, typically classified as small or mid cap, with established operations rather than pre-revenue speculation.
What stocks are in the Small and mid cap stocks theme?
Every public name that fits the Small and mid cap stocks thesis, with the rationale for inclusion. Click any ticker for the full stock guide. The portfolio above starts equal-weighted; you set your own target weights inside Walnut.
Celsius Holdings is a Boca Raton, Florida consumer packaged goods company that makes functional energy drinks marketed around fitness, metabolism, and zero-sugar formulations.
Crocs, Inc. together with its subsidiaries, designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and kids under the Crocs and HEYDUDE Brands in the United.
CRISPR Therapeutics AG is a Swiss-American biopharmaceutical company headquartered in Zug, Switzerland, with principal research operations in Boston, Massachusetts.
Dick's Sporting Goods is the leading omnichannel sporting-goods retailer in the United States, offering athletic footwear, apparel, and equipment across roughly 850-plus stores plu
Eastman Chemical Company (NYSE: EMN) is a global specialty materials producer headquartered in Kingsport, Tennessee, organized into four segments: Advanced Materials (specialty fil
Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructurings and liability management, and financial and valuation advisory services worldwide.
Sprouts Farmers Market (Nasdaq: SFM) is a Phoenix, Arizona-based specialty grocery retailer focused entirely on fresh, natural, and organic food.
For the full roundup of the individual names in this theme, grouped by the role each one plays, read best small cap stocks.
Which ETFs cover Small and mid cap stocks?
If you want the theme as a single ticker rather than as a portfolio, these are the ETFs people most commonly use. Each has trade-offs (concentration, expense ratio, sector overlap) covered in the individual ETF guides.
Vanguard's ultra-low-cost small-cap fund: ~1,300 US small-cap stocks tracking the CRSP US Small Cap Index at 0.03%.
Roughly 600 profitable US small-caps at 0.06%, tracking the earnings-screened S&P SmallCap 600 index.
Vanguard's low-cost mid-cap fund: ~300 US mid-cap stocks tracking the CRSP US Mid Cap Index at 0.03%.
The bottom line on Small and mid cap stocks
Small and mid cap stocks is best expressed as a focused basket of the names that actually fit the thesis rather than a diluted sector ETF. Core names include CELH, CROX, CRSP. In a portfolio it works as a satellite tilt you size deliberately, not a core holding.
FAQ
What counts as small cap or mid cap?
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The boundaries are conventions rather than rules. Small cap is broadly used for companies between roughly $300 million and $2 billion in market value and mid cap for roughly $2 billion to $10 billion, though index providers draw the lines differently and the thresholds drift upward over time as markets grow.
Do small caps outperform large caps?
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Historically there has been a small-cap premium in long-run data, but it has been absent for extended periods, including much of the decade after 2010 when large technology companies dominated. It also comes with materially higher volatility, so realised outcomes depend heavily on the period and on holding through drawdowns.
Why is analyst coverage thinner?
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Because research is funded by trading commissions and institutional interest, both of which scale with company size. A company with two analysts following it is more likely to be mispriced in either direction than one with thirty, which is the usual argument for active selection in this part of the market.
Why are small caps more sensitive to interest rates?
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They carry more floating-rate debt and rely more on bank credit than large companies, which issue long-dated fixed-rate bonds. When rates rise, the interest burden rises quickly for smaller borrowers, and a meaningful share of small-cap index members are unprofitable and dependent on refinancing.
Are mid caps a better balance?
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Many investors treat them that way: more established and better financed than small caps, with more growth room than mega caps. It is a reasonable framing, though mid caps are frequently the most under-owned segment precisely because they fall between the two categories most portfolios are built around.
What are the risks of a small and mid cap portfolio?
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Deeper drawdowns than the broad market, thinner liquidity that widens spreads when you want to trade, weaker balance sheets and refinancing risk, higher business failure rates, and greater sensitivity to domestic economic conditions. Position sizing matters more here than in large-cap portfolios.
Build the Small and mid cap stocks portfolio in Walnut
Walnut's AI assistant takes the thesis above, proposes 5 to 6 constituents with target weights, and lets you fund the portfolio through your existing broker. You approve every order; we never trade on your behalf.
Other themes
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- Semiconductors. The full chip stack: designers, foundries, equipment makers, materials suppliers, and packaging specialists.
- Defense and modernization. Software, sensors, and specialty materials at the center of US and allied defense buildouts.
- Critical materials. Rare earths, specialty metals, and strategic materials at the center of supply chain reshoring.
Walnut is informational, not investment advice. Theme membership is descriptive, not prescriptive; nothing on this page should be read as a recommendation. Always verify current financials and your own circumstances before investing.