Top Zacks #1 Ranked Small-Cap Mutual Funds

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Small-cap funds are the natural choice for investors willing to take up short term positions and a certain degree of risk. In addition, smaller firms plough back a large portion of their profits back into their business on a regular basis. This assures shareholders of better performance and higher profits in the future. Again, when markets are booming, small cap funds see high levels of demand which leads to significant increases in their prices. Investors looking for greater diversification would do well to consider adding some small cap flavor to their portfolios.

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.

American Century Small Cap Growth (ANOIX) invests the majority of its assets in small cap firms. Companies invested in must have market capitalizations within the range of the Russell 2000 Growth Index. The small-cap mutual fund has a three year annualized return of 25.76%.

The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.40% compared to a category average of 1.46%.

T. Rowe Price Diversified Small Cap Growth (PRDSX) seeks long-term capital growth. The majority of the fund’s assets are invested in small companies which are included in the MSCI US Small-Cap Growth Index. The fund’s top 25 holdings do not represent a significant share of total assets. The small-cap mutual fund has a three year annualized return of 32.26%.

Sudhir Nanda is the fund manager and he has managed this small-cap mutual fund since 2006.

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 34.07%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 2.88% compared to a category average of 1.35%.

Legg Mason ClearBridge Small Cap Growth A  (SASMX) invests the majority of its net assets in small cap companies and related investments. The fund emphasizes on small US companies with a growth oriented investment style. The small-cap mutual fund has a three year annualized return of 30.02%.

As of March 2012, this small-cap mutual fund held 86 issues, with 3.05% of its total assets invested in Sourcefire, Inc.

Federated MDT Small Cap Growth A (QASGX) seeks long term capital growth. The fund invests a large share of its assets in equity securities of companies whose market capitalization is identical to securities included in the Russell 2000 A Growth Index. The small-cap mutual fund has a three year annualized return of 26.58%.

Frederick L. Konopka is the fund manager 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, 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 ANOIX

Read the analyst report on PRDSX

Read the analyst report on PASMX

Read the analyst report on SASMX

Read the analyst report on QASGX



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