A small-cap value fund is a good choice for investors seeking diversification across sectors and companies and focusing on gaining exposure to stocks that are trading at a discount.
Those with a high-risk appetite should invest in these funds. Small-cap funds generally invest in companies having market cap of less than $2 billion. The companies, smaller in size, offer growth potential and can subsequently see an increase in market capitalization.
Meanwhile, value stocks are those that tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt equity). It is a common practice to invest in value funds for income or yield.
However, not all value funds solely comprise companies that primarily use their earnings to pay out dividends. Investors interested in picking value funds for yield should check the mutual fund yield, which is the total dividend payout divided by the value of the mutual fund’s shares.
Below we share with you three top-ranked, small-cap value 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.
Northern Small Cap Value Fund (NOSGX - Free Report) aims for capital growth over the long term. The fund invests the majority of its assets in equity securities of small-cap companies. These companies usually have market capitalization in the range of those included in the Russell 2000 Value Index. NOSGX has returned 14.6% on a year-to-date basis.
NOSGX has an expense ratio of 1.00% compared with the category average of 1.25%.
Bridgeway Small Cap Value Fund (BRSVX - Free Report) seeks appreciation of capital over the long term. The fund invests the majority of its assets in securities of small-capitalization companies that are included in the Nasdaq, NYSE MKT and the New York Stock Exchange. The fund mostly invests in stocks of those in the small-cap value category.BRSVX has returned 8% on a year-to-date basis.
As of June 2019, BRSVX held 112 issues, with 2.21% of its assets invested in Arqule Inc.
Goldman Sachs Small Cap Value Insights Fund Class A(GSATX - Free Report) aims for long-term capital appreciation. The fund invests the majority of its assets in securities of a well-diversified portfolio of small-capitalization companies. The fund may also invest in non-U.S. companies that are traded in the United States. GSATX has returned 13.8% on a year-to-date basis.
Len Ioffeis one of the fund managers of GSATX since 2011.
To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of funds.
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