Value stocks are stocks that tend to trade at a price that is lower than its fundamentals (i.e. earnings, book value, Debt-Equity). It is common for some investors to invest in value funds for the income or yield. However, not all value funds are comprised solely of companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is the dividend payments divided by the value of the mutual fund’s shares. Meanwhile, small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds. Small-cap funds generally invest in companies having market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently.
Below we will share with you 3 top-rated small cap value mutual funds. Each has earned either 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 value funds, investors can click here to see the complete list of funds.
CornerCap Small Cap Value (CSCVX - Free Report) seeks capital growth over the long run with an aim to generate income from dividends or interest on securities. CSCVX invests a large portion of its assets in equity securities of domestic small cap companies. Advisors consider those companies as small cap that have a market capitalization below $2 billion. The CornerCap Small Cap Value fund has returned 9.8% over the past one year.
As of December 2014, CSCVX held 193 issues with 0.80% of its assets invested in Universal Insurance Holdings Inc.
JPMorgan Small Cap Value A (PSOAX - Free Report) uses value oriented approach to invest a lion’s share of its assets in small cap companies. PSOAX focuses on acquiring equity securities of small cap companies having market capitalizations within the range of those included in the Russell 2000 Value Index. PSOAX generally invests in common stocks and REITs to employ its approach. The JPMorgan Small Cap Value A fund has returned 7% over the past one year.
PSOAX has an expense ratio of 1.24% as compared to category average of 1.34%.
Putnam Small Cap Value A (PSLAX - Free Report) seeks long-term capital growth. PSLAX invests a major portion of its assets in domestic small cap companies that are believed to be undervalued. PSLAX invests in companies having market capitalizations identical to those listed in the Russell 2000 Value Index. Factors including valuation, financial condition, growth prospect and dividends are considered before investing in common stocks of a company. The Putnam Small Cap Value A fund has returned 6.2% over the past one year.
Eric N. Harthun is the fund manager and has managed this fund since 2008.
To view the Zacks Rank and past performance of all small cap value 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. Pick the best mutual funds with the Zacks Rank.