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.
|Mutual Fund||Zacks Rank||Total Return YTD|
|ProFunds UltraSmall Cap Investor||#3 Hold||58.97%|
|Lord Abbett Developing Growth A||#1 Strong Buy||48.29%|
|Buffalo Emerging Opportunities||#4 Strong Sell||46.44%|
|Oberweis Micro-Cap||#3 Hold||46.01%|
|Adams Harkness Small Cap Growth||#1 Strong Buy||45.20%|
ProFunds UltraSmall Cap Investor ( UAPIX) seeks to provide daily returns which are twice as much as the daily performance of the Russell 2000 Index. The fund purchases equity securities and derivatives which have similar return characteristics. This small-cap mutual fund is non-diversified and has returned 91.25% over the last one year period.
The small-cap mutual fund has a minimum initial investment of $15,000 and an expense ratio of 1.81% compared to a category average of 2.09%.
Lord Abbett Developing Growth A (LAGWX) invests a minimum of 65% of itas assets in small cap stocks. The fund invests in both domestic and foreign companies, including those from emerging markets. This small-cap mutual fund returned 57% over the last one year period.
The fund manager is F. Thomas O'Halloran and he has managed this small-cap mutual fund since 2001.
Buffalo Emerging Opportunities (BUFOX) seeks appreciation over the long term. The fund purchases domestic preferred and common stocks, convertible securities as well as rights and warrants. These securities must be issued by companies whose market capitalization is at most $1 billion. This small-cap mutual fund returned 58.43% over the last one year period.
As of June 2013, this small-cap mutual fund held 61 issues, with 2.42% of its total assets invested in SPS Commerce, Inc.
Oberweis Micro-Cap (OBMCX) invests in companies whose market capitalizations are at most $600 million. Alternatively, their capitalizations must be identical to those companies which are part of the Russell Micro-Cap Growth Index This small-cap mutual fund returned 57.40% over the last one year period.
The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 2.00% compared to a category average of 1.43%.
Adams Harkness Small Cap Growth (ASCGX) seeks appreciably high capital growth. The fund invests the majority of its assets in equity securities issued by small and upcoming domestic companies. It may also invest in initial public offerings. This small-cap mutual fund returned 52.10% over the last one year period.
The fund manager is Mary Lisanti and she has managed this small-cap mutual fund since 2004.
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