Those with a high-risk appetite as well as an interest in growth and value investing may chose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation by capital gains, small-cap funds are expected to have higher growth prospects than their large and medium counterparts.
Blend funds provide significant exposure to both growth and value stocks and owe their origin to a graphical representation of a fund’s equity style box. Meanwhile, funds investing the majority of their assets in securities of companies with market capitalization lower than $2 billion are generally considered small-cap mutual funds.
Though funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn thanks to less international exposure.
Below, we share with you three top-ranked, small-cap growth mutual funds, Fuller & Thaler Behavioral Small-Cap Equity Fund FTHNX, Fidelity Stock Selector Small Cap Fund FDSCX and Thrivent Small Cap Stock AASMX. 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 small-cap blend funds.
Fuller & Thaler Behavioral Small-Cap Equity Fund invests most of its assets along with borrowing, if any, in common stocks of small capitalization companies based in the United States. FTHNX advisors consider companies to be based in the United States if they are publicly traded, incorporated, headquartered in this country, if their reported assets are primarily located and if they derive the majority of revenues here.
Fuller & Thaler Behavioral Small-Cap Equity Fund has three-year annualized returns of 9.3%.As of the end of September 2024, FTHNX had 123 issues and invested 2.9% of its net assets in Emcor Group.
Fidelity Stock Selector Small Cap Fund seeks capital appreciation by investing most of its net assets in common stocks of small-cap companies with market cap similar to the companies listed on the Russell 2000 Index or the S&P SmallCap 600 Index at the time of purchase. FDSCX advisors divest its investment in sectors like communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities.
Fidelity Stock Selector Small Cap Fund has three-year annualized returns of 3.8%. FDSCX has an expense ratio of 0.91%.
Thrivent Small Cap Stock fund invests most of its assets, along with borrowings, if any, in domestic equity securities of small-cap companies. AASMX advisors consider small companies as those with market capitalization within the range of market cap of companies listed on the Russell 2000 Index, S&P SmallCap 600 Index, or the small company market capitalization classifications published by Morningstar or Lipper.
Thrivent Small Cap Stock fund has three-year annualized returns of 3.6%.Matthew D. Finnhas been one of the fund managers of AASMX since the end of March 2013.
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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