Small-cap funds are an excellent choice for investors looking to maximize gains from a rising market. This is because they are very sensitive to positive changes in the economy which can cause their prices to appreciate significantly. Most small-cap companies also reinvest a large share of their profits back into their business, which is a positive sign for shareholders. This can assure them of better profits and performance in the long run. For investors willing to bear the associated risk, small-cap funds would make a prudent addition to a well diversified portfolio.
Below we will share with you 5 top rated small-cap funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap funds, then click here.
Fidelity Series Small Cap Opportunities (FSOPX) seeks capital appreciation. The majority of its assets are invested in small-cap companies. These are companies identical to those included in the Russell 2000 index or the S&P SmallCap 600. It invests primarily in common stocks and may invest in foreign securities. It may also purchase securities across different sectors. It is a no-load fund.
This small-cap fund returned 82.78% over the last one year period.
Wells Fargo Advantage Small Cap Growth A (MNSCX) invests heavily in firms with small market capitalizations and high growth potential. It seeks capital appreciation and may also utilize futures, options, repurchase and swap agreements as well as other derivatives to reduce risk or maximize returns. The fund has a five year annualized return of 7.7%.
The small-cap fund has a minimum initial investment of $1,000 and an expense ratio of 1.40% compared to a category average of 1.60%.
AllianceBernstein Small-Mid Cap Value A (ABASX) seeks capital appreciation. It invests in small to mid cap U.S. companies, generally holding a portfolio representing 60 to 125 companies. It focuses on equity securities and diversifies its investments to the greatest possible extent. The fund returned 88.52% in the last one year period.
Joseph G. Paul is the fund manager and he has managed this small-cap fund since 2002.
Delaware Small Cap Value A (DEVLX) invests in small-cap companies whose shares are attractively priced compared to their underlying value. At least 80% of its assets are invested in smaller companies. This small-cap fund returned 72.57% over the last one year period and has a ten year annualized return of 9.54%.
As of December 2009, this small-cap fund held 98 issues, with 2.53% of its total assets invested in Whiting Petroleum Corporation.
American Century Small Cap Value Investment (ASVIX) seeks long-term capital appreciation with income as a secondary consideration. The majority of its assets are invested in small-cap companies within the market cap of the S&P SmallCap 600 or Russell 2000 index. The fund has a ten year annualized return of 13.12%.
The fund manager is James Pitman and he has managed this small-cap fund since 2008.
To view the Zacks Rank and past performance of all small-cap 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/
