Risk-loving investors, who give precedence to capital appreciation over dividend payouts, may consider small-cap growth mutual funds to derive healthy returns. These funds focus on realizing an appreciable amount of capital growth by investing in stocks that are 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. 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. Also, due to their less 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-rated small-cap growth 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 small-cap growth funds, their Zacks Rank and past performance.
Putnam Small Cap Growth A (PNSAX - MF report) invests in common stocks of companies having market capitalization within the range of the Russell 2000 Growth Index. PNSAX invests in securities of companies whose earnings growth is expected to outpace the same of its peers. Putnam Small Cap Growth A has a three-year annualized return of almost 4%.
PNSAX has an expense ratio of 1.22% as compared to the category average of 1.37%.
Bridgeway Small-Cap Growth (BRSGX - MF report) seeks total return through capital growth over the long run. BRSGX maintains a diversified portfolio by investing a large share of its assets in small-cap companies having an impressive growth prospect. BRSGX invests in companies that are listed on NYSE, NYSE MKT and NASDAQ. It uses statistical tools in order to identify small-cap growth companies for potential investment. Bridgeway Small-Cap Growth has a three-year annualized return of 8.8%.
As of June 2016, BRSGX held 104 issues with 1.71% of its assets invested in Pool Corp
Fidelity Advisor Small Cap Growth A (FCAGX - MF report) invests the majority of its assets in common stocks of small cap growth companies. FCAGX invests in securities issued throughout the globe after considering factors including financial strength and economic condition. Fidelity Advisor Small Cap Growth A has a three-year annualized return of 8.5%.
FCAGX has an expense ratio of 1.36% as compared to the category average of 1.37%.
To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth funds.
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