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Best of Funds

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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.

Schneider Small Cap Value (SCMVX - MF report) seeks capital growth over the long term. The majority of its assets are invested in small cap stocks which are undervalued. A maximum of 20% of its assets may be invested in foreign securities as well as in American Depositary Receipts (ADRs). This small-cap mutual fund has a three year annualized return of 12.25%.

Arnold C. Schneider III is the fund manager and he has managed this small-cap mutual fund since 1998.

Bridgeway Ultra-Small Company (BRUSX - MF report) invests a large share of its assets in a wide range of securities of “ultra-small companies”. A maximum of 15% of its assets are invested in foreign instruments. The small-cap mutual fund has a three year annualized return of 12.86%.

As of September 2012, this small-cap mutual fund held 253 issues, with 2.29% of its total assets invested in Smith & Wesson Holding Corporation.

PNC Small Cap A (PPCAX - MF report) seeks capital growth over the long term. The fund invests heavily in domestic small cap companies. The market capitalization of these companies must be within to 100 million and $3 billion and they must be part of the Russell 2000 Index. This small-cap mutual fund has a three year annualized return of 18.54%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.45% compared to a category average of 1.46%.

HighMark Geneva Small Cap Growth A invests the majority of its assets in domestic small cap firms. The fund concentrates on investing in those companies which focus on delivering growth. Not more than 10% of its assets are invested in exchange traded funds (ETFs). This small-cap mutual fund has a three year annualized return of 19.08%.

Michelle J. Picard is the fund manager and he has managed this small-cap mutual fund since 2009.

Pacific Advisors Small Cap Value A (PASMX - MF report) seeks capital growth. It invests heavily in small cap companies. These firms must have a market capitalization not exceeding $2 billion. This small-cap mutual fund has a three year annualized return of 17.44%.

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 1.34%.

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.

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