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., Vanguard Strategic Small-Cap Equity Inv (VSTCX), Goldman Sachs Small Cap Eq Insghts (GCSAX) and Fidelity Series Small Cap Opps (FSOPX). 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.
Vanguard Strategic Small-Cap Equity Inv fund invests most of its net assets in domestic equity securities of small-capitalization companies, which its advisors believe have strong growth prospects as well as reasonable valuations with respect to their industry peers.
Vanguard Strategic Small-Cap Equity Inv fund has three-year annualized returns of 17.4%. VSTCX has an expense ratio of 0.23%.
Goldman Sachs Small Cap Eq Insghts fund seeks long-term growth of capital. GCSAX invests its net assets in a broadly diversified portfolio of equity investments in small-capital U.S. issuers, including foreign issuers that are traded in the domestic market.
Goldman Sachs Small Cap Eq Insghts fund has three-year annualized returns of 18%. As of July 2025, GCSAX held 513 issues with 0.9% of its assets invested in Fabrinet.
Fidelity Series Small Cap Opps fund invests most of its net assets to securities of small-cap companies, as those with market capitalization similar to the companies listed on the Russell 2000 Index or the S&P SmallCap 600 Index.
Fidelity Series Small Cap Opps fund has three-year annualized returns of 17.1%. Shadman Riaz has been one of the fund managers of FSOPX since 2009.
To view the Zacks Rank and the past performance of all small-cap blend mutual funds, investors canclick here to see the complete list of small-cap blend mutual funds.
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This article originally published on Zacks Investment Research (zacks.com).
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