A small-cap value fund is a good choice for investors seeking diversification across sectors and companies, and focusing on gaining exposure to stocks that are trading at a discount. 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 can subsequently see an increase in market capitalization.
Meanwhile, value stocks are those that tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity). It is a common practice to invest in value funds for income or yield. However, not all value funds solely comprise companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should surely check the mutual fund yield, which is the dividend payout divided by the value of the mutual fund’s shares.
Below we share with you three top-rated, small-cap value mutual funds. 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 all small-cap value mutual funds, their Zacks Rank and past performance.
Eagle Smaller Company A (EGEAX - MF report) seeks capital growth. EGEAX invests a major portion of its assets in equity securities of small-cap companies. Such companies have a market capitalization equal to or less than the largest company listed on the Russell 2000 Index during the most recent 12-month period. Eagle Smaller Company A has a three-year annualized return of 4.4%.
As of June 2016, EGEAX held 106 issues with 1.79% of its assets invested in Ellie Mae Inc.
Queens Road Small Cap Value (QRSVX - MF report) invests generally in securities of small-cap companies located in the U.S. QRSVX seeks to provide capital appreciation by investing the majority of its assets in equity securities of companies. Queens Road Small Cap Value has a three-year annualized return of 6.7%.
QRSVX has an expense ratio of 1.24% as compared to the category average of 1.36%.
CRM Small Cap Value Investor (CRMSX - MF report) seeks long-term capital appreciation. CRMSX invests a large chunk of its assets in equity securities of small-cap companies that are believed to be undervalued. The fund invests in securities of companies having market capitalization similar to those listed on the Russell 2000 Value Index. CRMSX invests in companies throughout the globe but traded in the US. CRM Small Cap Value Investor has a three-year annualized return of 7.7%.
As of June 2016, CRMSX held 65 issues, with 3% of its total assets invested in Conmed Corp.
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.
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