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The best-performing size category of all stocks is the smallest of the small—micro-caps. I love finding cheap and unknown micro-caps. However, one of the big problems of investing in micro-caps is liquidity.

Thankfully, there are now some exchange-traded funds that specialize in micro-caps. Business Week highlights three new micro-cap ETFs: iShares Russell Microcap Index Fund (IWC), First Trust Dow Jones Select MicroCap Fund (FDM) and PowerShares ETF-Zacks MicroCap Fund (PZI).

According to data collected by Professor Ken French, micro-caps have returned over 10,000,000% since middle of 1932.

Posted by edelfenbein at November 21, 2005 11:24 AM