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 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-ranked 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.
TCM Small Cap Growth (TCMSX - Free Report) invests a huge part of its assets in the common stocks of those small-cap companies whose market cap falls within the range of the Russell 2000 Index. TCMSX seeks growth of capital over the long term. TCM Small Cap Growth has one-year annualized returns of 20.4%.
TCMSX has an expense ratio of 0.95% compared with the category average of 1.26%.
Consulting Group Small-Mid Cap Equity (TSGUX - Free Report) seeks growth of capital. TSGUX invests a major portion of its assets in equity securities of small-mid cap companies, whose market cap will not exceed that of companies included on the Russell Mid Cap or the Russell 2500. The fund may also invest around one-tenth of its assets in securities of foreign companies, which are not traded on the U.S. OTC or on a U.S. exchange. Consulting Group Small-Mid Cap Equity has one-year annualized returns of 13.7%.
As of December 2017, TSGUX held 2,523 issues, with 4.29% of its assets invested in iShares Russell 2000 Value ETF.
MassMutual Select Small Cap Growth Equity R5 (MSGSX - Free Report) invests a large chunk of its assets in equity securities of companies, whose market cap is similar to those included on the S&P SmallCap 600 Index or the Russell 2000 Index. The fund may also invest around one-fifth of its assets in foreign companies, including those engaged in emerging markets. MassMutual Select Small Cap Growth Equity R5 has one-year annualized returns of 20.3%.
Kenneth L. Abrams is one of the fund managers of MSGSX since 2001.
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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