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The State Street small-cap fund proves bigger isn't always better.

This story appears in the August 1998 issue of Entrepreneur. Subscribe »

History has shown that the bull market in large-cap stocks doesn't run on endlessly--and that over the very, very long haul, investments in small-cap stocks pay off the most.

Over the years, small-cap stocks -- those companies with a market capitalization of less than $1 billion --have rewarded investors handsomely: Between 1926 and the end of 1997, while large-cap stocks returned an average 11 percent per year as measured by the S&P 500 Index, small-cap stocks returned 12.7 percent, according to Chicago-based equity research firm Ibbotson Associates.

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