Small-cap funds are the natural choice for investors with an appetite for more risk coupled with the desire to make large profits. Moreover, smaller firms reinvest most of their profits in a systematic manner. This assures shareholders of superior performance and substantial profits in the future. This category of funds also enjoy high levels of demand when markets are booming, which leads to significant increases in their prices. Investors looking for better diversification should consider adding some small cap flavor 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, then click here.
| Mutual Fund | Zacks Rank | Total Return YTD |
| SouthernSun Small Cap Investor | #1 Strong Buy | 12.4% |
| Homestead Small Company Stock | #1 Strong Buy | 9.4% |
| Gamco Westwood Mighty Mites AAA | #1 Strong Buy | 8.8% |
| HighMark Cognitive Value A | #1 Strong Buy | 8.7% |
| Delaware Small Cap Value A | #1 Strong Buy | 8.6% |
SouthernSun Small Cap Investor (SSSFX) seeks capital growth over the long term. The majority of the fund’s assets are invested in small-cap companies. It focuses on acquiring equity securities of companies which are included in the Russell 2000 index for the past year. The small-cap mutual fund returned 30.55% over the last one year period.
The fund manager is Michael W. Cook and he has managed this small-cap mutual fund since 2003.
Homestead Small Company Stock (HSCSX) invests in equity securities of small-cap companies which are priced attractively. The fund invests heavily in common stocks of companies whose market capitalization is identical to those which are part of the Russell 2000 index. The small-cap mutual fund has a ten year annualized return of 10.37%.
As of June 2010, this small-cap mutual fund held 39 issues, with 8.54% of its total assets invested in SSGA Fds.
GAMCO Westwood Mighty Mites AAA (WEMMX) seeks capital appreciation. The fund focuses on acquiring common stocks of micro-cap companies. These companies must be priced below the amount informed investors would be ready to pay to purchase a firm. The small-cap mutual fund has a five year annualized return of 6.48%.
The small-cap mutual fund has an expense ratio of 1.57% compared to a category average of 1.43%.
HighMark Cognitive Value A (HCLAX) invests heavily in small cap value companies which are identical to those which are part of the S&P SmallCap 600 or Citigroup Value Index. The fund focuses on acquiring common and preferred stock. The small-cap mutual fund returned 19.6% over the last one year period.
Thomas J. Mudge III is the fund manager has managed this small-cap mutual fund since 2006.
Delaware Small Cap Value A (DEVLX) seeks long term capital growth. The majority of the fund’s assets are invested in undervalued stock of small cap-companies. These companies must have a market capitalization less than three and half times the median market capitalization of the Russell 2000 Index. The small-cap mutual fund has a ten year annualized return of 9.32%.
The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.43% compared to a category average of 1.48%.
To view the Zacks Rank and past performance of all small-cap mutual funds, then click here.
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/mutualfund/
