Small-cap mutual funds are the preferred choice of investors willing to take a certain amount of risk while holding short term positions. In addition, smaller firms plough back a large portion of their profits back into their business on a regular basis. This assures shareholders of better performance and higher profits. When markets are booming, small cap mutual funds see high levels of demand which leads to significant increases in their prices. Investors seeking greater diversification would do well by adding 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, investors can click here to see the complete list of funds.
| Mutual Fund | Zacks Rank | Total Return YTD |
| Buffalo Micro Cap | #1 Strong Buy | 15.5% |
| ProFunds UltraSmall Cap | #1 Strong Buy | 14.1% |
| Buffalo Small Cap | #1 Strong Buy | 14.0% |
| Bridgeway Ultra-Small Company Market | #1 Strong Buy | 13.9% |
| Adams Harkness Small Cap Growth | #1 Strong Buy | 13.8% |
The small-cap mutual fund has an expense ratio of 1.51% compared to a category average of 1.45%.
ProFunds UltraSmall Cap (UAPIX) seeks to provide daily returns which are twice as much as the daily performance of the Russell 2000 Index. The fund purchases equity securities and derivatives which have similar return characteristics. This small-cap mutual fund has a three year annualized return of 26.79%.
The fund manager is Hratch Najarian and he has managed this small-cap mutual fund since 2009.
Buffalo Small Cap (BUFSX) invests the majority of its assets in equity securities such as doestic common stocks, preferred stocks and rights and warrants. A maximum of 20% of its assets are utilized to purchase securities of foreign companies traded on domestic stock exchanges and ADRs. This small-cap mutual fund has a three year annualized return of 13.43%.
As of March 2012, this small-cap mutual fund held 58 issues, with 4.23% of its total assets invested in Align Technology, Inc.
Bridgeway Ultra-Small Company Market (BRSIX) seeks total return over the long term. The fund invests the lion’s share of its net assets in stocks of ultra-small companies. It tries to match the total return of the Cap-Based Portfolio 10 Index published by the University of Chicago’s Center for Research in security prices over longer time periods. This small-cap mutual fund has a three year annualized return of 14.81%.
The small-cap mutual fund has an expense ratio of 0.75% compared to a category average of 1.36%.
Adams Harkness Small Cap Growth (ASCGX) invests a large proportion of its assets in small, yet-to-be established companies whose stocks are traded on domestic markets. The fund may invest in IPOs. This small-cap mutual fund has a three year annualized return of 20.36%
The fund manager is Mary Lisanti and she has managed this small-cap mutual fund since 2004.
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.
Read the analyst report on HSPGX
Read the analyst report on UAPIX
Read the analyst report on BUFSX
Read the analyst report on ASCGX
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