2 Mutual Funds For Investors Who Want Small-Cap Growth
Rather than cherry-picking small stocks one wants in their portfolio, investors can use mutual funds to gain exposure to a particular asset class.
Small-growth funds consist of faster growing companies whose share prices put them into the small-cap range. The typical definition is a company with a market capitalization between $300 million and $2 billion, although funds don't always strictly adhere to that.
Often, small growth companies have recently gone public or are bringing a new type of product or service to market.
These stocks are typically thinly traded and illiquid, and can be volatile. However, small-cap stocks, over time, deliver higher returns than larger stocks.
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A Couple Examples
The Satuit Capital U.S. Smid Cap Fund (MUTF: SATDX), for example, is one of the top-performing funds in the small growth category, with a one-year total return of 19.86 percent. Its Net Asset Value is $14.22.
Watch the expenses on this fund; its expense ratio of 1.5 percent is on the high side.
Top holdings are Taser International Inc, Omnicare Inc and Gentherm Inc.
Another top small-cap growth fund is the Baron Discovery Fund (MUTF: BDFIX). Its one-year total return is 17.10 percent. This is an even smaller fund, with total assets of $65.3 million. It has a hefty minimum investment of $1 million, so it could be best suited for use by institutions and financial advisors.
Top holdings here are Spectranetics Corp, Flotek Industries Inc and BioScrip Inc.
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