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Best of Funds

Investors looking to mop up handsome gains over a short run often invest in small cap funds. Though riskier in character than other fund categories, these funds have the ability to deliver appreciably higher returns due to two primary reasons. Firstly, they generate high volumes of sales in a booming market, leading to a rise in prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This reassures shareholders of better performance over the long term.

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

Emerald Growth A

#1 Strong Buy

21.2%

Kinetics Small Cap Opportunities No Load

#1 Strong Buy

19.0%

Legg Mason ClearBridge Small Cap Growth A

#1 Strong Buy

17.8%

Oppenheimer Discovery A

#1 Strong Buy

17.5%

AllianceBernsten Small Cap Growth A

#1 Strong Buy

17.2%

 
Emerald Growth A (HSPGX - MF report) invests a large share of its assets in common and preferred stocks and related convertible securities. The fund also invests in other equity instruments and invests in companies regardless of their size. This small-cap mutual fund has a three year annualized return of 25.89%.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 1.29% compared to a category average of 1.46%.

Kinetics Small Cap Opportunities No Load (KSCOX - MF report) seeks capital appreciation over the long term. The fund invests the majority of its assets in domestic and foreign small cap companies which are undervalued. This small-cap mutual fund has a three year annualized return of 17.92%.

The fund manager is Peter B. Doyle and he has managed this small-cap mutual fund since 2000.

Legg Mason ClearBridge Small Cap Growth A (SASMX - MF report) invests a large share of its net assets in small cap companies and related instruments. The fund emphasizes small US companies with an investment style which focuses on growth. This small-cap mutual fund has a three year annualized return of 25.42%.

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

Oppenheimer Discovery A (OPOCX - MF report) seeks capital growth. The fund invests heavily in small cap companies which are growth oriented. It focuses on acquiring common stocks of companies whose market capitalizations are below $3 billion. This small-cap mutual fund has a three year annualized return of 25.84%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.30% compared to a category average of 1.46%.

AllianceBernstein Small Cap Growth A (QUASX - MF report) invests a large proportion of its assets in equity securities of companies falling within the bottom 20% of all U.S equities in terms of market capitalization. At any given time, the fund invests in around 95 to 125 companies. This small-cap mutual fund has a three year annualized return of 29.07%

The fund manager is Bruce Aronow and he has managed this small-cap mutual fund since December of 2000.

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.

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