Top 5 Best Performing Small Cap Mutual Funds (March 2011)

Small-cap funds are the preferred option for investors with a reasonable appetite for risk and the willingness to take short term positions. Further, it has been observed over time that smaller firms reinvest a significant share of their profits back into their business on a regular basis. This reassures shareholders of better performance and higher profits in the future. Small cap funds also experience high demand when markets are surging which leads to significant increases in their prices. Investors looking for greater diversification could easily achieve their objective by adding small-cap funds to their portfolios.

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 Total Return YTD
Bridgeway Small-Cap Growth #1 Strong Buy 10.8%
Federated MDT Small Cap Core A #1 Strong Buy 9.8%
Federated MDT Small Cap Growth A #1 Strong Buy 9.7%
Profunds UltraSmall Cap #1 Strong Buy 9.7%
Glenmede Small Cap Equity #1 Strong Buy 9.5%

Bridgeway Small-Cap Growth (BRSGX) seeks total return of capital over the long term via capital growth. A large proportion of the fund’s assets are utilized to purchase stocks of small-cap companies. This small-cap mutual fund returned 27.06% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $2,000 and an expense ratio of 0.93% compared to a category average of 1.54%.

Federated MDT Small Cap Core A (QASCX) invests the majority of its assets in small-cap companies. The fund focuses on acquiring stocks of small-cap companies with similar characteristics to those included in the Russell 2000 index. This small-cap mutual fund returned 38% over the last one year period.

The fund manager is Frederick L. Konopka and he has managed this small-cap mutual fund since 2008.

Federated MDT Small Cap Growth A (QASGX) seeks long-term capital growth. The fund invests a large share of its assets in domestic small cap companies. It focuses on acquiring common stock and invests in firms which are identical to those which are part of the Russell 2000 growth index. This small-cap mutual fund returned 42.48% over the last one year period.

As of December 2010, this small-cap mutual fund held 159 issues, with 1.98% of its total assets invested in Sothebys A.

ProFunds UltraSmall Cap (UAPIX) invests the majority of its assets in equity securities and derivatives which provide twice the daily returns of the Russell 2000 index. The balance of its assets is utilized to purchase money market instruments. This small-cap mutual fund returned 63.53% over the last one year period.

The small-cap mutual fund has an expense ratio of 1.76% compared to a category average of 1.39%.

Glenmede Small Cap Equity (GTCSX) seeks capital appreciation over the long term at low levels of risk. The fund invests heavily in equity securities of domestic small-cap which are attractively priced relative to their underlying value. The small-cap mutual fund has a five year annualized return of 5.27%.

The fund manager is Robert J. Mancuso and he has managed this small-cap mutual fund since 1996.

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

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