Investors looking to mop up handsome gains over a short run often invest in small cap funds. Though riskier in character than other fund categories, these funds have the ability to deliver appreciably higher returns due to two primary reasons. Firstly, they generate high volumes of sales in a booming market, leading to a rise in prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This reassures shareholders of better performance over the long term.
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.
ING Small Company A (NASDAQ:AESAX - News) seeks capital appreciation. The fund invests the majority of its assets in common stocks of small cap firms. It may also lend out a maximum of a third of the securities in its portfolio on a long or short term basis. This small-cap mutual fund has a ten year annualized return of 5.23 %.
The small-cap mutual fund has an expense ratio of 1.47% compared to a category average of 1.38%.
Nuveen Small Cap Growth Opportunities A (FRMPX) invests heavily in small-cap companies. These firms must have market capitalizations lower than $3 billion. Not more than 25% of its assets are utilized to purchase foreign equity securities. This small-cap mutual fund has a three year annualized return of 4.75%.
The fund manager is Robert S. McDougall and he has managed this small-cap mutual fund since 2004.
Cambiar Small Cap (NASDAQ:CAMSX - News) seeks capital growth over the long term. The fund invests a large proportion of its assets in small-cap companies. The market capitalisation of these companies must be lower than $3.5 billion or within the range of the Russell 2000 Index, whichever is greater. The small-cap mutual fund has a five year annualized return of 1.49%.
The small-cap mutual fund has an expense ratio of 1.25% compared to a category average of 1.38%.
Needham Small Cap Growth (NASDAQ:NESGX - News) seeks capital growth with lowest possible tax implications. The majority of the fund’s assets is invested in domestic equity securities of companies with market capitalizations of less than $2 billion or is within the range of the Russell 2000 index, if greater. The small-cap mutual fund has a three year annualized return of 6.87%.
As of August 2011, this small-cap mutual fund held 75 issues, with 2.40% of its total assets invested in Plantronics.
Putnam Small Cap Value A (NASDAQ:PSLAX - News) primarily purchases common stocks of domestic small cap companies. It focuses on investing in undervalued companies, concentrating on small firms whose market capitalizations are within the range of the Russell 2000 Value Index. The small-cap mutual fund has a ten year annualized return of 4.96%.
The fund manager is Eric N. Harthun and he has managed this small-cap mutual fund since 2008.
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.
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