Top 5 Small Cap Mutual Funds - Best of Funds

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

American Century Small Cap Growth (ANOIX) seeks capital appreciation over the long term. The fund invests the majority of its assets in small cap firms. Companies invested in must have market capitalizations within the range of the Russell 2000 Growth Index. The small-cap mutual fund returned 32.07% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.42% compared to a category average of 1.52%.

Fidelity Advisor Small Cap Value A (FCVAX) invests heavily in securities of small-cap companies These companies must have market capitalizations identical to those which are included in the Russell 2000 Index or the S&P SmallCap 600 Index. This small-cap mutual fund has a three year annualized return of 5.39%.

As of April 2011, this small-cap mutual fund held 64 issues, with 3.08% of its total assets invested in Berry Petroleum Company.

Putnam Small Cap Value A (PSLAX) seeks capital growth. The fund primarily purchases common stocks of domestic small cap companies. It focuses on investing in undervalued companies, concentrating on small firms whose market capitalizations are within the range of the Russell 2000 Value Index. The small-cap mutual fund returned 19.55 % over the last one year period.

Eric N. Harthun is the fund manager and he has managed this small-cap mutual fund since 2008.

BlackRock Small Cap Growth II Investor A (MDSWX) invests a large proportion of its assets in small cap companies with particular emphasis on domestic firms. The fund focuses on acquiring equity securities of companies with the potential for delivering superior earnings growth. This small-cap mutual fund has a ten year annualized return of 4.68%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.53% compared to a category average of 1.52%.

Goldman Sachs Structured Small Cap Equity A (GCSAX) seeks capital appreciation over the long term. The fund invests the majority of its assets a wide range of domestic equity securities issued by small cap companies. It may also purchase foreign stocks traded in U.S. markets. This small-cap mutual fund returned 28.36% over the last one year period.

The fund manager is Katinka J. Domotorffy and she has managed this small-cap mutual fund since 2009.

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.