Funds investing the majority of their assets in securities of companies with market capitalization of less 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.
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.
Below we will share with you top-rated small-cap blend mutual funds. Each has 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.
DFA Tax-Managed US Small Cap (DFTSX - Free Report) invests a huge chunk of its assets in equity securities of small-cap domestic companies. DFTSX seeks appreciation of capital for the long run as well as a reduction in the impact of federal income taxes on returns. DFA Tax-Managed US Small Cap returned 23.9% in a year.
DFTSX has an expense ratio of 0.52% compared with a category average of 1.15%.
Vanguard Strategic Small-Cap Equity Investor (VSTCX - Free Report) invests the bulk of its assets in securities of domestic small-cap companies that are expected to be undervalued and have strong growth prospects. VSTCX seeks to maintain a risk profile similar to the MSCI US Small Cap 1750 Index. Vanguard Strategic Small-Cap Equity Investor returned 25.7% in one year.
James P. Stetler is one of the fund managers of VSTCX since 2006.
MM Russell 2000 Small Cap Index Administrative (MCJYX - Free Report) invests a large portion of its assets in the equity securities of companies that are included in the Russell 2000 Index. MCJYX seeks its investment objective by investing in small-cap domestic companies. MM Russell 2000 Small Cap Index Administrativereturned 24.9% in a year’s time.
As of June 2018, MCJYX held 2,029 issues with 0.23% of its assets invested in Five Below Inc.
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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