Small-cap mutual funds are basically those with very high risks but potential for substantial rewards. These funds usually invest in companies that have relatively small market capitalizations, which can make the funds more volatile with higher growth possibilities than larger cap stocks. Investors who can bear the fluctuation in the market tend to look toward small-cap funds to penetrate emerging industries and high-growth opportunities.
Here are the 12 top-performing small-cap mutual funds in business, despite a lot of risks associated with investing in smaller, lesser-known firms.
Vanguard Small-Cap Index Fund (VSMAX)
The Vanguard small-capitalization index fund follows CRSP US Small CapIndex. This gives broad yet deep exposure to small-company stocks, and it thus has been a good active performer for long-term economy diversification at low expenses in the small-cap investing arena.
Fidelity Small-Cap Growth Fund (FSSGX)
It invests in a variety of actively managed small-cap companies with high growth potential. This is one of those funds that have beaten its category peers principally by taking calculated bets on high-growth stocks in an emerging industry.
T. Rowe Price Small-Cap Stock Fund (OTCFX)
T. Rowe Price is known for their expert stock selection. The fund seeks long-term capital appreciation by investing in high-quality small-cap growth stocks with strong financials and growth potential.
Schwab Small-Cap Equity Fund (SWSSX)
The small-cap equity fund offered by Schwab invests in smaller companies that seem to have good growth prospects. In doing so, it can boast of a long historical track record of good, low-expense performance geared to ensure above-market returns.
Janus Henderson Small Cap Growth Fund (JSCGX)
This fund invests in high-growth small-cap stocks, selecting winners in fast-growing sectors through deep research and analysis. The fund has delivered solid returns, hence being one of the favorite choices for growth-oriented investors.
Russell Small Cap Completeness Fund (RFVIX)
This fund seeks complete small-cap exposure, diversifying its portfolio in a variety of sectors through pure small-cap stocks. This combination of growth and value makes it well-rounded for those looking to capitalize on the small-cap sector.
American Century Small-Cap Growth Fund (ACSMX) This fund invests in small, high-growth companies and has generally done well over time. It follows a disciplined investment process, focusing on small firms with strong competitive positions and market advantages.
Vanguard Growth Index Fund (VIGAX)
While this fund is not a pure small-cap exposure play, the weighting to small caps is significant. It tracks the CRSP US Growth Index and will fit the bill for those investors after smaller company exposure that can exhibit growth characteristics.
Conclusion
The small-cap mutual funds are very exciting routes for investors who are prepared and willing to take high risk with the potential of better return. The above-mentioned funds have done exceedingly well by concentrating on high growth sectors and firms. But, being any high-risk investment class, researching well and considering your risk appetite is a must before parking money in small-cap mutual funds. These funds are better suited for long-term investors looking to capitalize on the growth of emerging companies while navigating the inherent volatility of the small-cap market.
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