Top 5 Zacks#1 Ranked Small-Cap Mutual Funds

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Small-cap stocks are considered to be a good option only for those investors with an appreciable appetite for risk. But investing in quality small cap stocks can generate better returns than most large or mid cap companies due to their higher growth potential. Mutual funds investing in small cap stocks provide a great deal of liquidity and comfort. This is because they provide opportunities for the common investor to capitalize on the growth potential of those companies without having to worry about individual trades to square off their positions.

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.

James Advantage Small Cap Value (JASCX) seeks long term capital appreciation. The fund predominantly invests in stocks of small cap companies whose market capitalizations at the time of purchase were lower than stocks listed in Russell 2000 index. The small-cap mutual fund returned 23.46% over the last three year period.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 1.50% compared to a category average of 1.45%.

MMA Praxis Small Cap A (MMSCX) seeks capital appreciation over the long term. The fund invests heavily in equity securities of small-cap companies with market capitalizations between $400 million to $2.5 billion. It may also invest in convertible as well plain vanilla fixed income securities. The small-cap mutual fund returned 27.96% over the last three year period.

J. Luther King Jr is the fund manager and he has managed this small-cap mutual fund since 2007.

Virtus Quality Small-Cap A (PQSAX) invests a large proportion of its assets in undervalued stocks relative to their growth potential. The market capitalization of these companies must be lesser than or equal to the market value of companies which are part of the Russell 2000 Value index. The small-cap mutual fund returned 23.84% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.48% compared to a category average of 1.35%.

JPMorgan Small Cap Equity Fund A (VSEAX) seeks capital appreciation over the long term. The fund invests the majority of its assets in small cap companies having market value equal to the companies listed in the Russell 2000 Index. The small-cap mutual fund returned % over the last three year period.

As of September 2011, this small-cap mutual fund held 98 issues, with 3.08% of its total assets invested in J.P. Morgan Prime Money Market Fund.

AllianceBernstein Small Cap Growth A (QUASX) seeks capital appreciation over the long term. The fund invests heavily in equity securities of companies falling within the bottom 20% of the total U.S equities in terms of market capitalization. The small-cap mutual fund returned 31.92% over the last three year period.

Wen-Tse Tseng is the fund manager and he has managed this small-cap mutual fund since 2006.

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 JASCX

Read the analyst report on MMSCX

Read the analyst report on PQSAX

Read the analyst report on VSEAX

Read the analyst report on QUASX



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