Top Small-cap Mutual Funds

Today we are featuring 3 "small-cap" mutual funds, which invest mainly in companies that have market capitalization of less than $2 billion.

Investors can find such funds by checking out the Zacks #1 Rank Small-cap Funds list.

Williston Basin/Mid-North America (ICPAX) seeks to provide long-term capital appreciation. The fund invests in equity securities of domestic and foreign issuers. It may invest in development-stage companies, government and corporate debt obligations and money market instruments.

The fund may also invest in stocks, shares of exchange-traded funds ("ETFs"), stock indexes and repurchase agreements. Its top 10 holdings include National Oilwell Varco Inc. (NOV - Analyst Report), Fuel Tech Inc. (FTEK - Snapshot Report) and Sigma-Aldrich Corp. (SIAL - Analyst Report). This Zacks#1 Rank fund has an expense ratio of 1.50%. As of September 2008, its portfolio turnover was 109.48%.

Investors are required to make an initial investment of $1000 to enter the fund. Since May 2007, ICPAX has been managed by Robert Loest, who has 22 years of experience in the money management industry.

Royce Special Equity Fund (RSEIX) primarily invests in equity securities, with focus on companies with market capitalizations of less than $2.5 billion, attempting to find inexpensive companies with high returns on invested capital and low leverage. The Zacks# 1 Rank fund seeks long-term capital growth and believes investors should have a long-term investment horizon of at least three years.

Its top 10 holdings include Lancaster Colony Corp. (LANC - Snapshot Report), Bio-Rad Laboratories Inc. (BIO - Snapshot Report) and Arden Group Inc. (ARDNA). RSEI has an expense ratio 1.05%. The fund has allocated 76.67% of its net assets in stocks, 2.20% in cash and 1.82% in foreign stock.

The fund is managed by Charles R. Dreifus, who enjoys a rating of 1.7 and has 28 years of experience in managing the small and micro-cap value portfolio. Before joining Royce & Associates in 1998, Dreifus was a General Partner and Managing Director of Lazard Freres & Co. LLC.

Old Westbury Global Small & Mid Cap (OWSMX) invests most of its assets in securities of diversified companies with market capitalization between $100 million and $10 billion. These stocks are traded on a principal U.S. exchange or U.S. over-the-counter market or are non-U.S. companies in foreign and emerging countries.

This Zacks#1 Rank fund had a turnover of 36 % as of October 2008. Investors are required to make a minimum initial investment of $1,000 to enter the fund, which has an expense ratio of 1.11%. Its top 10 holdings include Global Payments Inc. (GPN - Snapshot Report), Carter's Inc. (CRI - Snapshot Report) and Dun & Bradstreet Corp. (DNB - Analyst Report).

OWSMX allocates 68.51% of its assets in bonds, 11.75% in stock and 2.29% in cash. The fund is managed by a team, with Karen E. Umland as the lead manager since its inception in April 2005.

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new new mutual funds section. section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

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.

Read the full analyst report on RSEIX

Read the full analyst report on OWSMX

Read the full analyst report on ICPAX