Small-cap growth funds are natural choices for investors with a high-risk appetite when capital appreciation over the long term takes precedence over dividend payouts. These funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term.

 

Small-cap funds are good choices for investors seeking diversification across different sectors and companies. These generally invest in companies having a market cap lower than $2 billion. The companies, smaller in size, offer growth potential, and their market capitalization may increase subsequently. Also, due to their lower international exposure, small-cap funds offer higher protection than their large- and mid-cap counterparts against any global downturn.

 

Below, we share with you three top-ranked small-cap growth mutual funds, viz., AMG GW&K Small/Mid Cap Growth Fund (ACWDX Quick QuoteACWDX - Free Report) , Vanguard Explorer Fund (VEXPX Quick QuoteVEXPX - Free Report) , and Bridge Builder Small/Mid Cap Growth Fund (BBGSX Quick QuoteBBGSX - 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 invests its assets insecurities of small- and mid-cap companies. ACWDX advisors define these companies based on the range of capitalization on the Russell 2500 Growth Index.

 

AMG GW&K Small/Mid Cap Growth Fund has a three-year annualized return of 20.2%. As of October 2022, ACWDX held 79 issues, with 2.7% of its assets invested in PAYLOCITY HOLDING.

 

Vanguard Explorer Fund seeks capital appreciation and invests in small companies that are valued at less than $2 billion at the time of purchase. VEXPX distributes dividends and capital gains in December.

 

Vanguard Explorer Fund has a three-year annualized return of 19.6%. VEXPX has an expense ratio of 0.45% compared with the category average of 1.21%.

 

Bridge Builder Small/Mid Cap Growth Fund invests in small and mid-cap securities as well as other instruments, such as in certain investment companies that aim to track the performance of small and mid-cap securities. 

 

Bridge Builder Small/Mid Cap Growth Fund has a three-year annualized return of 14.2%. Stephen J. Bishop has been one of the fund managers of BBGSX since September 2021.

 

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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