Small-cap value mutual funds provide excellent choices for investors looking for bargains, i.e., stocks at a discount with impressive growth potential. Value mutual funds comprise stocks trading at a discount to book value, low price-to-earnings ratios and high dividend yields.
Value investing is a very popular strategy, and for a good reason. After all, who doesn’t want to find stocks with a low Price/Earnings (P/E) ratio, solid outlooks and decent dividends? Additionally, small-cap funds are good choices for investors with a high-risk appetite, as companies with small market capitalizations are expected to have higher growth potential than large- and mid-cap companies. Small-cap funds generally invest in companies with a market cap of less than $2 billion. Also, small-cap funds are expected to provide diversification across different sectors and companies.
Below, we share with you three top-ranked small-cap value mutual funds, namely, FPA Queens Road Small Cap Value QRSVX, DFA US Targeted Value DFFVX and Invesco Small Cap Value VSCAX. Each has 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 Small Cap Value mutual funds.
FPA Queens Road Small Cap Value seeks to achieve its objective by mainly investing in equity securities, such as common, preferred, and convertible stocks of small-cap U.S. companies. Normally, it invests the majority of its net assets (including investment borrowings) in small-cap equities.
FPA Queens Road Small Cap Value has a three-year annualized return of 13.4%. As of August 2025, QRSVX held 50 issues, with 4.4% of its assets invested in Fabrinet.
DFA US Targeted Value invests in a varied group of readily marketable securities of U.S. small and mid-cap companies that its advisors consider to be value stocks with high profitability.
DFA US Targeted Value has a three-year annualized return of 12.6%. DFFVX has an expense ratio of 0.29%.
Invesco Small Cap Value seeks long-term capital growth by investing the majority of its net assets in the undervalued securities of small-cap companies. VSCAX invests primarily in common stock.
Invesco Small Cap Value has a three-year annualized return of 21.7%. Jonathan Mueller has been one of the fund managers of VSCAX since June 2010.
To view the Zacks Rank and the past performance of all small-cap value mutual funds, investors can click here to see the complete list of small cap value mutual funds.
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