Small-cap growth funds are natural choices for investors with a high-risk appetite when capital appreciation over the long term takes precedence over dividend payouts. These funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term.
Small-cap funds are also good choices for investors seeking diversification across different sectors and companies. These 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 lower international exposure, small-cap funds offer higher protection than their large- and mid-cap counterparts against any global downturn.
Below, we share with you three top-ranked small-cap growth mutual funds, namely Congress Small Cap Growth Fund Retail Class CSMVX, AMG Frontier Small Cap Growth Fund MSSCX and Invesco Discovery Fund OPOCX. 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 the majority of its assets in common stocks of small-cap companies across all sectors of the economy. For its investment purpose, CSMVX advisors define small-cap companies as those with market-cap equivalent to the companies listed on the Russell 2000 Growth Index during the last 12 months.
Congress Small Cap Growth Fund Retail Class has three-year annualized returns of 16.5%. As of April 2022, CSMVX held 40 issues, with 5.3% of its assets invested in Lantheus Holdings Inc.
AMG Frontier Small Cap Growth Fund invests the majority of its assets in common stocks of small-cap companies, and retains the securities even if the companies drop below or outgrow the capitalization range. MSSCX usually invests in common stocks that are traded in the over-the-counter market.
AMG Frontier Small Cap Growth Fund has three-year annualized returns of 13.8%. MSSCX has an expense ratio of 0.95% compared with the category average of 1.21%.
Invesco Discovery Fund aims for capital growth. OPOCX invests the majority of its assets in common stocks of American companies with high-growth potential. For its investment purposes, OPOCX advisors define small-cap issuers as those that are at the time of purchase within the range of market-cap of the Russell 2000 Growth Index.
Invesco Discovery Fund has a three-year annualized return of 8.5%. Ronald J. Zibelli Jr. has been one of the fund managers of OPOCX since 2006.
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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