Risky investors who prefer capital appreciation over dividend payouts may consider investing in small-cap growth mutual funds. Growth funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value 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 less than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Less international exposure makes small-cap funds less vulnerable to a stronger U.S. dollar. Though small-cap stocks are believed to provide greater returns, they are also expected to be more volatile than large and mid-cap companies. Also, growth funds may experience more fluctuations than the other fund classes.
Below, we share with you three top-ranked small-cap growth mutual funds, namely, Congress Small Cap Growth Fund Retail Class CSMVX, AMG GW&K Small/Mid Cap Fund Class I GWGIX and Buffalo Small Cap Fund BUFSX. 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.
Congress Small Cap Growth Fund Retail Class seeks long-term capital growth by investing most of its assets along with borrowings, if any, in common stocks of small-cap companiesacross all sectors of the economy. CSMVX advisors define small-cap companies with market capitalizations equivalent to the companies listed in the Russell 2000 Growth Index at the time of purchase.
Congress Small Cap Growth Fund Retail Class has three-year annualized returns of 13.9%. As of the end of January 2022, CSMVX had 41 issues and 6.10% of its assets were invested in short-term investments.
AMG GW&K Small/Mid Cap Fund Class I seeks long-term capital appreciation by investing most of its assets, along with borrowings, if any, in common stock and preferred stock of U.S based small- and mid-capitalization companies. GWGIX advisors choose to invest in either growth or value-oriented companies.
AMG GW&K Small/Mid Cap Fund Class I has three-year annualized returns of 9.8%. GWGIX has an expense ratio of 0.91% compared with the category average of 1.09%.
Buffalo Small Cap Fund invests most of its net assets in equity securities, consisting of common stocks, preferred stocks, convertible preferred stocks, warrants and rights of small capitalization companies. BUFSX advisors define small-cap companies with market capitalizations equivalent to the companies listed in the Morningstar US Small Growth Index at the time of purchase.
Buffalo Small Cap Fund has three-year annualized returns of 8.9%. Robert Male has been one of the fund managers of BUFSX since April 1998.
To view the Zacks Rank and the past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth mutual funds.
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