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

Investors aiming to reap substantial profits in the short run often turn to small cap funds. Though comparatively riskier than other fund categories, these funds have the ability to deliver appreciably higher returns due to two principal reasons. Firstly, they generate high sales volumes in a rising market, leading to a spike in their prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This often reassures shareholders of better performance over the long term.

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
Federated MDT Small Cap Growth A #1 Strong Buy 15.3%
Federated MDT Small Cap Core A #1 Strong Buy 13.8%
SunAmerica Focused Small-Cap Value #1 Strong Buy 13.3%
MMA Praxis Small Cap A #1 Strong Buy 12.9%
Glenmede Small Cap Equity #1 Strong Buy 12.5%

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. The small-cap mutual fund has a three year annualized return of 2.93%.

The small-cap mutual fund has a minimum initial investment of $1,500 and an expense ratio of 1.75% compared to a category average of 1.52%.

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 33.42% over the last one year period.

The fund manager is Daniel Mahr and he has managed this small-cap mutual fund since 2008.

SunAmerica Focused Small-Cap Value A (SSSAX) seeks capital appreciation over the long term. A large proportion of the fund’s assets are utilized to purchase stocks of small-cap companies whose market capitalizations lie within the range of the Russell 2000 index. The small-cap mutual fund has a ten year annualized return of 7.68%.

As of December 2010, this small-cap mutual fund held 44 issues, with 4.92% of its total assets invested in SPDR KBW Regional Banking.

MMA Praxis Small Cap A (MMSCX) invests the majority of its assets in equity securities of small-cap companies. These firms must have market values between $400 million and $2.5 billion at the time of investment. This small-cap mutual fund returned 37.79% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.69% compared to a category average of 1.52%.

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 4.91%.

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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