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3 Top Small-Cap Growth Mutual Funds to Buy

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Small-cap growth funds become the natural choice 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 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.

Columbia Small Cap Growth I A (CGOAX - Free Report) invests the majority of its assets in equity securities of companies having market capitalization within the universe of the S&P SmallCap 600 Index. CGOAX seeks appreciation of capital. The fund focuses on acquiring common stocks of companies that are believed to have an impressive growth potential over the long run. CGOAX may also invest in companies with short- and medium-term above-average growth potential. Columbia Small Cap Growth I A has a three-year annualized return of 2%.

Wayne Collette is one of the fund managers of CGOAX since 2006.

PNC Multi Factor Small Cap Growth A seeks growth of capital over the long run. PLWAX invests a large portion of its assets in securities of small-cap companies. The fund generally invests in common stocks and American Depositary Receipts (ADRs). Foreign securities may also be considered as potential investments. PNC Multi Factor Small Cap Growth A has a three-year annualized return of 4.8%.

PLWAX has an expense ratio of 1.12% as compared to the category average of 1.36%.

TCM Small Cap Growth (TCMSX - Free Report) invests a large share of its assets in companies having market capitalizations similar to those listed in the Russell 2000 Index. TCMSX seeks growth of capital over the long term. TCM Small Cap Growth has a three-year annualized return of 5.6%.

Richard J. Johnson is the fund manager of TCMSX since 2004.

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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