The Globe and Mail reports in its Wednesday edition that Canadian small-cap stocks have not had a good time recently. Globe columnist Gordon Pape writes that the S&P/TSX SmallCap Index has a one-year loss of 4.93 per cent and a 10-year average annual compound rate of return of 0.86 per cent. No one would get excited over that. There are several reasons for this weak showing. For starters, about half the index consists of mining and energy stocks, two notoriously volatile sectors. Second, small companies often rely on loans to fuel growth. With interest rates rising through most of the past two years, that has made borrowing more expensive, putting pressure on bottom lines. Then there is the risk factor. Small companies are perceived as being more prone to losses or even going out of business than well-established large-cap companies, especially in uncertain times. Also, analyst coverage of small caps is thin to non-existent. None of this is to say that small-cap stocks cannot be big winners. The top-performing stock in the history of Mr. Pape's newsletter is Boyd Group Services. It was recommended at $5.50 in 2010 by contributing editor Ryan Irvine. The stock closed Friday at $287.79 for a gain of 5,132 per cent.