Top 5 Small Cap Mutual Funds - Best of Funds

Mutual funds which invest in small-cap companies are the natural choice of investors with an appreciably higher appetite for risk and the willingness to take short term positions. Smaller companies reinvest a significant share of their earnings back into their business on a regular basis. This reassures stockholders of improved performance and higher profits. When markets are booming, small cap mutual funds see high levels of demand which leads to significant increases in their prices. Investors seeking greater diversification would do well by adding small cap flavor 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. To view the Zacks Rank and past performance of all small-cap funds, then click here.

Eaton Vance Small-Cap A (ETEGX) seeks long-term growth by investing in small-cap companies. The fund focuses on acquiring common stocks of domestic companies with an emphasis on growth stocks. Companies chosen for investment must have market capitalizations identical to those included in the S&P SmallCap 600 Index. The small-cap mutual fund returned 4.52% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.45% compared to a category average of 1.52%.

Wells Fargo Intrinsic Small Cap Value (SCOVX) invests the majority of its assets in equity securities of small-cap companies. These firms must have market capitalizations within the range of the Russell 2500 Index. This small-cap mutual fund has a three year annualized return of 8.25%.

The fund manager is Samir Sikka and he has managed this small-cap mutual fund since 2010.

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 8.06% over the last one year period.

As of September 2011, this small-cap mutual fund held 88 issues, with 2.59% of its total assets invested in ValueClick, Inc.

Lord Abbett Small-Cap Value A (LRSCX) invests heavily in small-cap companies. The fund purchases common and convertible preferred stocks, convertible securities and other related instruments. The companies it invests must have market capitalizations within the range of the Russell 2000 index. This small-cap mutual fund has a ten year annualized return of 10.69%.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.25% compared to a category average of 1.38%.

Virtus Small-Cap Sustainable Growth A (PSGAX) seeks capital appreciation over the long term. The fund invests in small cap companies while maintaining the risk profile of the S&P 500 which consists entirely of large cap companies. This small-cap mutual fund returned 27.68% over the last one year period.

The fund manager is Todd A. Beiley and he has managed this small-cap mutual fund since 2008.

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.