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Top 5 Zacks #1 Ranked Small-Cap Mutual 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.

Needham Small Cap Growth (NESGX - Free Report) seeks long term capital growth. The fund invests the majority of its assets in equity securities of small cap firms. These companies must have capitalizations identical to those which are part of the Russell 2000 Index The small-cap mutual fund has a three year annualized return of 5.99%.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 1.92% compared to a category average of 1.43%.

JPMorgan Small Cap Core Select (VSSCX) 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 12.56%.

R. Canon Coleman II is the fund manager and he has managed this small-cap mutual fund since 2010.

Invesco SmallCapValue A (VSCAX) seeks capital growth. The fund invests the majority 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. A maximum of 25% of its assets may be invested in foreign securities. The small-cap mutual fund has a three year annualized return of 12.42%.

As of March 2013, this small-cap mutual fund held 70 issues, with 3.57% of its total assets invested in Alere Inc.

Bridgeway Ultra-Small Company (BRUSX - Free 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 11.76%.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 1.22% compared to a category average of 1.41%.

Franklin International Small Cap Growth Advisor (FKSCX - Free 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. The small-cap mutual fund has a three year annualized return of 12.11%.

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

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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