Top 5 Zacks #1 Ranked Small-Cap Mutual Funds

Zacks Investment Research

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.

Longleaf Partners Small-Cap (:LLCSX) 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 19.86%.

The small-cap mutual fund has an expense ratio of 0.92% compared to a category average of 1.29%.

Manning & Napier Small Cap A (MNSMX) invests heavily in small cap companies. These firms must have market capitalizations lower than $3 billion. The fund may invest in both domestic and foreign stocks, including emerging market securities as well as in ADRs. This small-cap mutual fund has a three year annualized return of 14.66%.

The fund manager is Jeffrey A. Herrmann and he has managed this small-cap mutual fund since 1992.

Sit Small Cap Growth (SSMGX) seeks long-term capital appreciation by investing in small-cap companies. The fund invests the majority of its assets in small companies located in the U.S. which have the potential to deliver above average growth. This small-cap mutual fund has a three year annualized return of 19.1%.

As of December 2011, this small-cap mutual fund held 88 issues, with 2.39% of its total assets invested in Ultimate Software Group. Inc.

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 20.19%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.36% compared to a category average of 1.45%.

Buffalo Small Cap (BUFSX) seeks capital growth over the long term. The fund invests the majority of its assets in common, preferred stocks and related convertible securities of domestic small-cap companies. A maximum of 20% of its assets may be invested in ADRS. This small-cap mutual fund has a three year annualized return of 13.53%.

The fund manager is Christian A. Andreach and he has managed this small-cap mutual fund since 2002.

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 LLCSX

Read the analyst report on MNSMX

Read the analyst report on SSMGX

Read the analyst report on SASMX

Read the analyst report on BUFSX



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