Large-cap stocks have a market capitalization of at least $10 billion. They are the least risky due to the fact that their assets will see them through any downturn.

Mid-cap companies have a market capitalization of $2 billion to $10 billion.

Over the last decade, mid-caps have outperformed small and large-caps. This is due to the fact that they are small enough to grow faster than large caps during the expansion phase. Because of their size, they are less likely to fail than small caps during a contraction phase.

During the expansion phase, small-cap companies have an advantage over large-cap and mid-cap stocks. The stock price will rise in tandem with the company's expansion. During the expansion phase, large-cap stocks lose favor. Return-seeking investors regard them as stodgy and boring.

Small-cap, mid-cap, and large-cap stocks each offer unique advantages and risks. Large-cap stocks, from well-established companies, provide stability, steady dividends, and lower volatility, making them safer for conservative investors. However, their growth potential is often slower. Mid-cap stocks strike a balance, offering moderate growth and reasonable stability, making them ideal for investors seeking a mix of safety and upside potential. Small-cap stocks, representing younger or niche companies, can deliver high growth but come with greater volatility and risk. They are sensitive to economic shifts and may lack liquidity. While large-caps are reliable for long-term holdings, small and mid-caps can outperform in bullish markets. A diversified portfolio including all three can optimise risk and reward, depending on an investor’s goals and risk tolerance.