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, investors can click here to see the complete list of funds.
Cambiar Small Cap (CAMSX) seeks capital growth over the long term. The fund invests a large proportion of its assets in small-cap companies. The market capitalization 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 three year annualized return of 20.14%.
Maria L. Mendelsberg is the fund manager and she has managed this small-cap mutual fund since 2004.
Lord Abbett Small-Cap Value A (LRSCX) invests heavily in small-cap companies. The fund purchases common and convertible preferred stocks, convertible securities and other related instruments. The companies it invests must have market capitalizations within the range of the Russell 2000 index. This small-cap mutual fund has a three year annualized return of 15.2%.
The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.23% compared to a category average of 1.36%.
Pacific Advisors Small Cap Value A (PASMX) seeks capital appreciation. A large share of the fund’s assets is invested in stocks of companies whose market capitalization is less than $2 billion. It also invests heavily in stocks with market capitalization of less than $500 million, known as micro-cap stocks. The small-cap mutual fund has a three year annualized return of 13.6%.
George A. Henning is the fund manager and he has managed this small-cap mutual fund since 1993.
Needham Small Cap Growth (NESGX) invests the majority of its assets in domestic equity securities of companies traded on a domestic security exchanges. The fund focuses on acquiring stocks which are attractively priced relative to their underlying value. The small-cap mutual fund has a three year annualized return of 13.19%.
As of June 2011, this small-cap mutual fund held 62 issues, with 10.52% of its total assets invested in Dreyfus Treasury Pr Cash Mgmt Inst.
AllianceBernstein Small Cap Growth A (QUASX) seeks long term capital appreciation. The fund invests heavily in equity securities of small-cap companies with market capitalizations of less than $10 million. At any given point in time the fund invests in between 95 to 125 companies. This small-cap mutual fund has a three year annualized return of 24.35%.
The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.43% compared to a category average of 1.45%.
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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