Investors looking to mop up handsome gains over a short run often invest in small cap funds. Though riskier in character than other fund categories, these funds have the ability to deliver appreciably higher returns due to two primary reasons. Firstly, they generate high volumes of sales in a booming market, leading to a rise in prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This 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.
Fidelity Advisor Small Cap Growth A (FCAGX) seeks capital growth. The majority of the fund’s assets are invested in small companies. It focuses on acquiring common stocks and purchases both domestic and foreign securities. The small-cap mutual fund returned 33.24% over the last one year period.
The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.34% compared to a category average of 1.52%.
JHancock Small Cap Equity A (SPVAX) invests a large proportion of its assets in small companies. The market capitalization of these companies must be identical to firms which are part of the Russell 2000 index. Not more than 15% of its assets may be utilized to purchase foreign securities or bonds with relatively low ratings. This small-cap mutual fund has a three year annualized return of 12.31%.
Robert P. Shea is the fund manager and he has managed this small-cap mutual fund since 2009.
Scout Small Cap (UMBHX) seeks capital appreciation over the long term. The fund invests at least 80% of its assets in small-cap companies. It primarily invests in domestic equity securities, focusing on common stocks. The small-cap mutual fund returned 33.44% over the last one year period.
The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.06% compared to a category average of 1.52%.
Pacific Advisors Small Cap A (PASMX) invests heavily in stocks of small-cap companies with market capitalizations within $2 billion. A substantial share of its assets is used to purchase stocks issued by companies with market capitalizations below $500 billion. This small-cap mutual fund has a ten year annualized return of 10.18%.
As of March 2011, this small-cap mutual fund held 33 issues, with 5.16% of its total assets invested in Kirby Corp.
Eagle Small Cap Growth A (HRSCX) seeks capital growth over the long term. The fund invests the majority of its assets in small-cap companies. These firms must be within the market cap range of the Russell 2000 index for the last twelve months. This small-cap mutual fund returned 43.46% over the last one year period.
The fund manager is Bert Boksen and he has managed this small-cap mutual fund since 1993.
To view the Zacks Rank and past performance of all small-cap mutual funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.