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Best of Funds

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Investors having a high risk appetite and looking for significantly high returns often choose small-cap funds. These funds diversify the risk inherent in small cap stocks and have high growth potential. Since they focus on small cap companies there is the added advantage of higher flexibility due to the quicker decision making of these firms. Investors willing to remain invested for longer periods who can withstand high volatility should invest in small cap funds to earn substantially profits.

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.

Franklin International Small Cap Growth Advisor (FKSCX - MF report) seeks capital growth over the long term. The fund invests the majority of its assets in a wide range of tradable equity and related securities of small foreign companies. It focuses on purchasing common stock. This small-cap mutual fund returned 30.30% over the last one year period.

Edwin Lugo is the fund manager and he has managed this small-cap mutual fund since 2006.

Fidelity Small Cap Discovery (FSCRX - MF report) invests a large share of its assets in small cap companies. The market capitalization of these companies must be lower than the largest company included in the Russell 2000 Index or the S&P SmallCap 600 Index. It may invest in both domestic and foreign securities. This small-cap mutual fund returned 25.99% over the last one year period.

As of October 2012, this small-cap mutual fund held 72 issues, with 2.79% of its total assets invested in TCF Financial Corporation.

Bridgeway Ultra-Small Company (BRUSX - MF report) seeks total return over the long term on capital. The fund 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. This small-cap mutual fund returned 24.56% over the last one year period.

The small-cap mutual fund has an expense ratio of 1.22% compared to a category average of 1.41%.

Bogle Small Cap Growth (BOGLX - MF report) invests the majority of its assets in domestic small cap companies. The market capitalization of these companies must be within the range of the Russell 2000 Index. Companies which have the potential to grow more than the index are selected for investment purposes. This small-cap mutual fund returned 22.64% over the last one year period.

John C. Bogle Jr. is the fund manager and he has managed this small-cap mutual fund since 1999.

Wells Fargo Intrinsic Small Cap Value (SCOVX - MF report) seeks capital growth over the long term. The fund invests a large share of its assets in equity securities of small-cap companies. These firms must have market capitalizations within the range of the Russell 2500 Index. This small-cap mutual fund returned 22.15% over the last one year period.

The small-cap mutual fund has an expense ratio of 1.49% compared to a category average of 1.32%.

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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