Investors focusing on small-cap stocks know the power of differentiation in a portfolio. A smart mix of smaller stocks can offset broad trends that affect more mainstream stocks. Although small-cap stocks typically are pricier than mid-cap and large-cap companies, historically they offer a higher return than larger companies. From 1926 through 2012, the smallest fifth of all stocks returned 11.5% versus 9.7% for the largest fifth, says The Wall Street Journal, citing Wharton School economist Jeremy Siegel. Seen from another perspective, the small-cap index, the Russell 2000, surged 163% from January 2000 through Oct. 10 (including dividends), while the S&P 500 returned only 75% during the same period, the WSJ reports.