Indices Aren't a No-Brainer for Small-Cap Investing

With small-cap stocks making a stunning comeback since last fall, you might be thinking about buying into that rise with a small-stock index fund.

Think again.

Though indexing works well for large-cap stocks, small-cap index funds sport a noticeable shortcoming: To maintain so-called style purity, they must sell stocks that outgrow their corresponding index, which means investors can miss out on much of the rise of fast-growing companies while incurring capital gains taxes to boot. ...