Top 5 Best Performing Small Cap Funds (Jan. 2011)

Equity mutual funds carry a relatively higher risk component since they ride the highs and also as suffer the lows of the equity markets. Small-cap funds probably carry the highest degree of risk in this category. These funds invest in equity shares of smaller companies and aim to reap dividends when these firms realize their full potential. Such companies continuously reinvest their profits in search of higher growth but have low liquidity and unproven business models. This also means that they provide higher returns and make good additions to a well diversified portfolio.

Below we will share with you 5 top rated small-cap mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Mutual Fund Zacks Rank 1 Yr Return
Wasatch Emerging Markets Small Cap #1 Strong Buy 41.7%
Alliance Bernstein Small Cap Growth A #1 Strong Buy 37.0%
Waddell & Reed Small Cap A #1 Strong Buy 35.9%
Highmark Small Cap Advantage #1 Strong Buy 35.2%
Eagle Small Cap Growth A #1 Strong Buy 35.1%

Wasatch Emerging Markets Small Cap (WAEMX) invests a large share its assets in small companies from emerging markets. Equity securities of firms with market capitalizations not exceeding $3 billion constitute the majority of its investments. The small-cap mutual fund has a three year annualized return of 9.68%.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 2.10% compared to a category average of 1.76%.

AllianceBernstein Small Cap Growth A (QUASX) seeks capital appreciation. The fund invests heavily in equity securities of small-cap companies with market capitalizations of less than $10 million. This small-cap mutual fund returned 36.99% over the last one year period.

The fund manager is Bruce Aronow and he has managed this small-cap mutual fund since 2000.

Waddell & Reed Small Cap A (UNSAX) invests at least 80% of its assets in domestic and foreign small-cap companies. The fund focuses on acquiring common stocks of companies which are new entrants, particularly those which are entering sectors with the opportunity for appreciable growth. The small-cap mutual fund has a five year annualized return of 6.72%.

As of December 2010, this small-cap mutual fund held 52 issues, with 3.63% of its total assets invested in Stratasys.

HighMark Small Cap Advantage (HSAFX) seeks long term capital growth. The majority of the fund’s assets are invested in small-cap companies with strong growth characteristics. Not more than 20% of its assets are utilized to purchase foreign securities. This small-cap mutual fund returned 35.16% over the last one year period.

The small-cap mutual fund has an expense ratio of 1.30% compared to a category average of 1.48%.

Eagle Small Cap Growth A (HRSCX) invests the majority of its assets in small-cap companies. These firms must be within the market cap range of the Russell 2000 index at the time of purchase for the last twelve months. The small-cap mutual fund has a ten year annualized return of 8.17%.

The fund manager is Bert Boksen and he has managed this small-cap mutual fund since 1995.

To view the Zacks Rank and past performance of all small-cap mutual funds, then click here.

About Zacks Investment Research 1767 Articles

Zacks Investment Research is one of the most highly regarded firms in the investment industry. In 1978 Zacks originated the concept of utilizing earnings estimates revisions to make profitable investment decisions. Zacks offers multiple investment products and services to help investors achieve superior returns.

Visit: Zacks.com

Be the first to comment

Leave a Reply

Your email address will not be published.


*