Small-cap funds are the preferred option for investors with a reasonable appetite for risk and the willingness to take short term positions. Further, it has been observed over time that smaller firms reinvest a significant share of their profits back into their business on a regular basis. Small cap funds also experience high demand when markets are surging which leads to significant increases in their prices. Investors looking for greater diversification could easily achieve their objective by adding small-cap funds to their portfolios.
Below we will share with you 5 top rated small-cap mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small-cap funds, investors can click here to see the complete list of funds.
T. Rowe Price Small-Cap Stock (OTCFX) seeks long term capital appreciation. The fund invests heavily in small-cap companies. The fund invests across various economic sectors and without regard to company size. Not more than 1.5% of its assets may be invested in a single company. This small-cap mutual fund has a three year annualized return of 22.71%.
The fund manager is Gregory A. McCrickard and he has managed this small-cap mutual fund since 1992.
Waddell & Reed Small Cap A (UNSAX) invests the majority of its assets in domestic and foreign small-cap companies. The fund focuses on acquiring common stocks of companies which are new entrants, particularly those entering growing sectors. This small-cap mutual fund has a three year annualized return of 20.76%.
As of June 2012, this small-cap mutual fund held 70 issues, with 3.52% of its total assets invested in Ultimate Software Group, Inc.
Longleaf Partners Small-Cap (LLSCX) seeks long-term capital appreciation by investing in small-cap companies. Equity securities, including related convertible securities constitute the fund’s major investments. A maximum of 30% of its assets may be used to purchase foreign securities, including those issued from emerging markets. This small-cap mutual fund has a three year annualized return of 23.33%.
The small-cap mutual fund has an expense ratio of 0.92% compared to a category average of 1.29%.
Legg Mason ClearBridge Small Cap Growth A (SASMX) invests a large share of its net assets in small cap companies and related instruments. The fund concentrates on investing in small domestic companies which focus on delivering growth. This small-cap mutual fund has a three year annualized return of 20.31%.
The fund manager is Aram E. Green and he has managed this small-cap mutual fund since 2007.
Buffalo Small Cap (BUFSX) seeks capital growth over the long term. The fund invests the majority of its assets in common, preferred stocks and related convertible securities of domestic small-cap companies. A maximum of 20% of its assets may be invested in ADRS. This small-cap mutual fund has a three year annualized return of 13.43%.
The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.00% compared to a category average of 1.45%.
To view the Zacks Rank and past performance of all small-cap mutual funds, investors can click here to see the complete list of funds.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.
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