Risk-loving investors, who give precedence to capital appreciation along with dividend payouts, may consider small-cap blend mutual funds to derive healthy returns. These funds focus on realizing an appreciable amount of capital growth by investing in stocks that are projected to rise over the long term.
Meanwhile, small-cap funds are good choices for investors seeking diversification across different sectors and companies. Small-cap funds generally invest in companies having a market cap lower than $2 billion.
The companies, smaller in size, offer growth potential, and their market capitalization may increase subsequently. Also, due to their less international exposure, small-cap funds offer higher protection than their large and mid-cap counterparts in any global downturn.
Below, we share with you three top-ranked, small-cap growth mutual funds, namely Thrivent Small Cap Stock Fund Class A AASMX, DFA U.S. Micro Cap Portfolio DFSCX and SEI Small Cap II Fd Cl A SECAX. 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 small-cap blend funds.
Thrivent Small Cap Stock Fund Class A invests most of its assets, along with borrowings, if any, in equity securities of small companies with market capitalization similar to the companies listed on the Russell 2000 Index or S&P SmallCap 600 Index. AASMX advisors also invest mainly in the equity securities of smaller U.S. companies.
Thrivent Small Cap Stock Fund Class A has three-year annualized returns of 13.5%. As of the end of July 2022, AASMX had 85 issues and invested 2.51% of its net assets in TTM Technologies Incorporated.
DFA U.S. Micro Cap Portfolio fund invests most of its net assets in a broad and diverse group of domestic micro-cap companies using a market-capitalization weighted approach. DFSCX advisors also purchase or sell futures contracts and options of U.S. equity securities and indices.
DFA U.S. Micro Cap Portfolio has three-year annualized returns of 10.8%. DFSCX has an expense ratio of 0.42% compared with the category average of 1.03%.
Small Cap II Fd Cl A seeks capital appreciation by investing most of its assets, along with borrowings, if any, in equity securities of small companies with market capitalization similar to the companies listed on the Russell 2000 Index at the time of purchase. SECAX also invests in small-capitalization indexes and securities of REITs.
Small Cap II Fd Cl A has three-year annualized returns of 10.5%. R. Todd Vingers has been one of the fund managers of SECAX since April 2012.
To view the Zacks Rank and the past performance of all small-cap blend mutual funds, investors can click here to see the complete list of small-cap blend mutual funds.
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