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3 Top-Ranked Small-Cap Value Funds for Attractive Returns

Zacks Equity Research
MEET vs. WDAY: Which Stock Is the Better Value Option?

Small-cap value mutual funds are an excellent choice for investors on the lookout for a bargain, i.e., stocks at a discount, with impressive growth potential. Value mutual funds are those that invest in stocks trading at a discount to book value, have low price-to-earnings ratio and high dividend yields. Value investing has always been a popular strategy, and for a good reason.

Investors with a high risk appetite also find small-cap funds intriguing as small-market capitalization has a higher growth potential than large or mid-cap companies. Small-cap funds generally invest in companies with a market cap below $2 billion. Also, small-cap funds are expected to provide diversification across sectors and companies.

Below we share with you three top-ranked, small-cap value mutual funds. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform peers in the near future. Investors can click here to see the complete list of all small-cap value mutual funds.

Fidelity Small Cap Value FCPVX seeks appreciation of capital. The fund invests mainly in securities, including common stocks of small-cap companies. FCPVX focuses on investing in those companies Fidelity Management & Research Company expects to be underpriced. Fidelity Small Cap Value has one-year annualized returns of 8.8%.

FCPVX has an expense ratio of 0.91% compared with the category average of 1.30%.

Bridgeway Omni Tax-Managed Small-Cap Value N BOTSX invests in a wide variety of small-cap companies that the Adviser expects to be value stocks. The fund invests mainly in those small-cap companies that are listed in the NASDAQ, the NYSE MKT and the New York Stock Exchange. Although, the fund invests primarily in U.S. companies, its also invests around 15% of its assets in non-U.S. companies. Bridgeway Omni Tax-Managed Small-Cap Value Nhas one-year annualized returns of 11%.

As of June 2018, BOTSX held 674 issues, with 1.08% of its assets invested in Delek US Holdings Inc.

Vanguard Small Capitalization Value Index Fund VISVX focuses on tracking the performance of its benchmark index, CRSP US Small Cap Value Index. The fund uses an indexing investment approach in order to track its benchmark index’s performance and invests in value stocks of domestic small-cap companies. Vanguard Small Cap Value Index Investor has one-year annualized returns of 11.1%.

William A. Coleman is one of the fund managers of VISVX since 2016.

To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of funds.

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