4 Small Cap Value Mutual Funds to Enhance Your Return - Mutual Fund Commentary

Small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds. Small-cap funds generally invest in companies having market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Meanwhile, value stocks are stocks that tend to trade at a price that is lower than its fundamentals (i.e. earnings, book value, Debt-Equity). It is common for some investors to invest in value funds for the income or yield. However, not all value funds are comprised solely of companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is the dividend payments divided by the value of the mutual fund's shares.

Below we will share with you 4 buy-ranked small cap value mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (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 value funds, investors can click here to see the complete list of funds.

Brown Advisory Small-Cap Fundamental Value Investor (BIAUX) seeks capital growth over the long run. BIAUX invests a lion's share of its assets in equity and equity-related securities of small cap companies including common stock, preferred stock and equity options. BIAUX may also invest in other securities, which include ADRs, REITs and ETFs. BIAUX defines small cap firms as those which are having market capitalizations below $6 billion. The Brown Advisory Small-Cap Fundamental Value Investor fund has a five-year annualized return of 18.5%.

J. David Schuster is the fund manager and has managed BIAUX since 2008.

Dreyfus Select Managers Small Cap Value A (DMVAX) invests a major portion of its assets in companies having market capitalizations similar to those included in the Russell 2000 Value Index. DMVAX invests a maximum of 15% of its assets in companies located outside the US. DMVAX usually has more than one sub advisor to manage its assets. The Dreyfus Select Managers Small Cap Value A fund is non-diversified and has a five-year annualized return of 18.5%.

As of May 2015, DMVAX held 521 issues with 1.16% of its assets invested in Steelcase Inc.

Prudential Small-Cap Value Z (TASVX) seeks capital growth above the average level. TASVX invests a large chunk of its assets in small size companies having market capitalizations identical to those listed in the Russell 2000 Index or the Standard & Poor's SmallCap 600 Index. Though TASVX invests in domestic securities including REITs, it may also invest in non-US securities. The Prudential Small-Cap Value Z fund has a five-year annualized return of 14.6%.

TASVX has an expense ratio of 0.68% as compared to category average of 1.34%.

Heartland Value (HRTVX) generally invests in securities of firms with market cap below $2 billion. HRTVX focuses on acquiring common stocks of companies that are believed to be undervalued. HRTVX may also invest a notable portion of its assets in companies having market capitalizations below $300 million, commonly known as micro companies. The Heartland Value fund has a five-year annualized return of 11.5%.

As of March 2015, HRTVX held 129 issues with 2.42% of its assets invested in Cambrex Corp.

To view the Zacks Rank and past performance of all small cap value mutual funds, investors can click here to see the complete list of funds.

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. Pick the best mutual funds with the Zacks Rank.