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 blend mutual funds, viz., Fidelity Stock Selector Small Cap FDSCX, T. Rowe Price Integrated US SMCC Eq TQSMX and Nuveen Quant Small Cap Equity TCSEX. 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 funds.
Fidelity Stock Selector Small Cap invests primarily in common stocks of both domestic and foreign issuers. FDSCX invests both in growth and value stocks, and in securities of companies with small market capitalization (those with market capitalization similar to companies on the Russell 2000 or the S&P SmallCap 600 index).
Fidelity Stock Selector Small Cap has three-year annualized returns of 4.1%. As of July 2024, FDSCX held 214 issues, and 1.4% of its assets were invested in Insight Enterprises, Inc.
T. Rowe Price Integrated US SMCC Eq fund invests most of its net assets in equity securities of small and mid-cap U.S. companies. For its investment purposes, TQSMX defines small and mid-cap securities as ones with market cap within the market capitalization range of the Russell 2500 Index during the time of purchase.
T. Rowe Price Integrated US SMCC Eq has three-year annualized returns of 7.6%. TQSMX has an expense ratio of 0.87%.
Nuveen Quant Small Cap Equity fund invests most of its assets, along with borrowings, if any, in equities of small-cap companies. TCSEX advisors define small-cap as securities that, at the time of purchase, fall within the capitalization range of companies included on the Russell 2000 Index.
Nuveen Quant Small Cap Equity has three-year annualized returns of 4.3%. Pei Chen has been one of the fund managers of TCSEX since 2016.
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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