From Huge Dow to Micro

Everyone recognizes the Dow Jones Industrial Average, but few people have heard of the Dow Jones Select Micro Cap Index. It measures the performance of very small stocks trading on major U.S. exchanges. Dow Jones represents the index as the investable portion of U.S. micro cap companies because there is believed to be liquidity in those stocks.

The DJ Select Micro Cap Index is a custom benchmark. Issues with the smallest market capitalizations and lowest trading volumes are excluded, although the customization categorization is due to fundamental screening. Companies with poor fundamentals are filtered out. The screens exclude stocks with poor operating profit margins, inadequate price-to-earnings ratios, price-to-sales ratios, earnings momentum, and relative performance versus other micro caps.

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