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3 Top Rated Small-Cap Growth Mutual Funds for Better Returns

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Small-cap funds generally invest in companies having a market cap of less than $2 billion. The companies, smaller in size, offer growth potential, and their market capitalization may increase subsequently. Less international exposure makes small-cap funds less vulnerable to a stronger U.S. dollar.

Though small-cap stocks are believed to provide greater returns, they are also expected to be more volatile than large and mid-cap companies. Also, growth funds may experience more fluctuations than the other fund classes.

Risky investors who prefer capital appreciation over dividend payout may consider small-cap growth mutual funds. Growth funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term. Meanwhile, small-cap funds are good choices for investors seeking diversification across different sectors and companies.

Below, we share with you three small-cap growth mutual funds, namely, AMG GW&K Small/Mid Cap Growth Fund – N (ACWDX - Free Report) , DFA - U.S. Small Cap Growth Portfolio (DSCGX - Free Report) and Invesco Discovery Fund (OPOCX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.

AMG GW&K Small/Mid Cap Growth Fund – N seeks long-term capital appreciation by investing most of its assets, along with borrowings, if any, in securities of small- and mid-capitalization quality companies with growth-oriented characteristics. ACWDX advisors define small- and mid-capitalization companies as those with market capitalization similar to that of companies listed on the Russell 2500 Growth Index.

AMG GW&K Small/Mid Cap Growth Fund – N has three-year annualized returns of 8.9%. As of the end of July 2022, ACWDX had 80 issues and 4.55% of its assets were invested in short-term investment.

DFA - U.S. Small Cap Growth Portfolio invests most of its assets in securities of small-cap U.S. companies, which its advisors believe as having high profitability and relative prices compared to other U.S. small-cap companies during the time of purchase. DSCGX advisors generally invest in a portfolio of a broad and diverse group of readily marketable securities using a market-capitalization-weighted approach.

DFA - U.S. Small Cap Growth Portfolio has three-year annualized returns of 7.3%. DSCGX has an expense ratio of 0.35% compared with the category average of 1.21%.

Invesco Discovery Fund invests most of its net assets in common stocks of small-capitalization companies, which portfolio managers believe have favorable growth prospects. OPOCX advisors consider small-cap companies as those with market capitalization similar to those listed on the Russell 2000 Growth Index at the time of purchase.

Invesco Discovery Fund has three-year annualized returns of 6.0%. Ronald J. Zibelli has been one of the fund managers of OPOCX since May 2006.

To view the Zacks Rank and the past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth mutual funds.

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