When investors have the willingness to take short term positions and the ability to bear a certain degree of risk, small-cap funds could be the correct choice. These funds generate significant demand driven sales during a market upswing, which lead to an increase in their prices. Smaller firms also look to continuously reinvest their profits back into their business. This reassures shareholders of superior performance and higher profit potential from such companies. Small Cap funds therefore make excellent additions to a well-diversified portfolio.
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.
Nuveen NWQ Small Cap Value A (NSCAX) seeks capital growth over the long term. The fund invests a large share of its assets in companies whose market capitalizations are similar to those included in the Russell 2000 Value Index or the Standard & Poor’s SmallCap 600 Index. This small-cap mutual fund has a three year annualized return of 16.04%.
The small-cap mutual fund has an expense ratio of 1.45% compared to a category average of 1.35%.
Legg Mason ClearBridge Small Cap Growth A (SASMX) invests a large share of its net assets in small cap companies and related instruments. The fund concentrates on investing in small domestic companies which focus on delivering growth. This small-cap mutual fund has a three year annualized return of 4.58%.
As of June 2012, this small-cap mutual fund held 88 issues, with 3.27% of its total assets invested in Sourcefire, Inc.
Frost Small Cap Equity A (FAHMX) seeks maximum total return. The fund invests a large share of its assets in small cap companies. It aims to purchase equity securities which are attractively priced relative to the underlying value of the firm. This small-cap mutual fund has a three year annualized return of 8.77%.
The fund manager is Andrew P. Baumbusch and he has managed this small-cap mutual fund since 2010.
Queens Road Small Cap Value (QRSVX) invests the majority of its assets in equity securities of small cap companies. These firms must have a market capitalization not exceeding $2 billion. The fund focuses on acquiring securities of companies with strong financial positions and experienced management teams. This small-cap mutual fund has a three year annualized return of 8.04%.
The small-cap mutual fund has an expense ratio of 1.24% compared to a category average of 1.41%.
Longleaf Partners Small-Cap (LLSCX) seeks long-term capital appreciation by investing in small-cap companies. Equity securities, including related convertible securities constitute the fund’s major investments. A maximum of 30% of its assets may be used to purchase foreign securities, including those issued from emerging markets. This small-cap mutual fund has a three year annualized return of 16.68%.
The fund manager is O. Mason Hawkins and he has managed this small-cap mutual fund since 1989.
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.
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