Small-company stocks have "substantially outperformed" those of larger firms over the past four years, according to a report on Wednesday by Lipper Inc.

The Lipper report said $100 invested in the Standard & Poor’s small-cap stock index on Dec. 31, 1999, was worth about $150 on March 31 this year.

By comparison, $100 invested in the S&P 500 index of larger firms was worth only $81 on March 31, 2004.

"During most of the recent bear market, small-cap stocks and the mutual funds that invest in them only occasionally dipped below the initial $100 investment level," wrote Andrew Clarke, Lipper senior research analyst, in the report.

"The same cannot be said of large-cap stocks and the funds that invest in them. Since September 2000, large-cap stocks were consistently worth less than the initial $100 investment."

The report said three sectors had helped drive returns for small caps in the past four years: electronic technology, industrial services and finance.

(Lipper)