Investors with a high risk appetite as well as an interest in growth and value investing may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as "hybrid funds," aim for value appreciation by capital gains, small-cap funds are expected to have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to both growth and value stocks and owe their origin to a graphical representation of a fund's equity style box.
Funds investing the majority of their assets in securities of companies with market capitalization lower than $2 billion are generally considered small-cap mutual funds. Though funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn, thanks to less international exposure.
Below we will share with you three buy-rated small-cap blend 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 funds.
JPMorgan US Small Company A (JTUAX - Free Report) invests a large portion of its assets in equity securities of small cap U.S. companies. These small cap companies have market capitalization similar to those companies listed on the Russell 2000 Index during the time of purchase. JPMorgan US Small Company A has a three-year annualized return of almost 4%.
As of September 2016, JTUAX held 385 issues, with 1.40% of its assets invested in Take-Two Interactive Software Inc.
TIAA-CREF Small-Cap Equity Retail (TCSEX - Free Report) seeks favorable returns over the long term. TCSEX invests heavily in domestic small cap companies having market capitalization identical to those included on the Russell 2000 Index. TCSEX primarily invests in small-sized companies across different sectors. TIAA-CREF Small-Cap Equity Retail has a three-year annualized return of 4.4%.
TCSEX has an expense ratio of 0.75% compared to a category average of 1.31%.
SSgA Dynamic Small Cap N (SVSCX - Free Report) invests a large chunk of its assets in equity securities of companies listed in the Russell 2000 Index. SVSCX may also invest a maximum of 20% of its assets in securities of companies that are not included on the index. SSgA Dynamic Small Cap N has a three-year annualized return of 4.5%.
Anna Lester is one of the fund managers and has managed SVSCX since 2010.
To view the Zacks Rank and past performance of all small-cap blend mutual funds, investors can click here to see the complete list of funds.
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