Small-cap funds are good choices for investors seeking diversification across different sectors and companies. Investors with a high-risk appetite should invest in these funds. 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.
Meanwhile, value stocks tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity). It is common to invest in value funds for income or yield. However, not all value funds comprise solely companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is dividend payments divided by the value of the mutual fund’s shares.
Below, we share with you three top-ranked small-cap value mutual funds, namely, Bridgeway Small Cap Value Fund BRSVX, DFA U.S. Targeted Value Portfolio DFFVX and Glenmede Small Cap Equity Portfolio GTSCX. 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.
Bridgeway Small Cap Value Fund seeks a long-term total return on capital by capital appreciation. BRSVX invests the majority of its net assets in stocks listed on the New York Stock Exchange, NYSE American and Nasdaq in the small-cap value category.
Bridgeway Small Cap Value Fund has a three-year annualized return of 23.6%. As of September 2022, BRSVX held 133 issues, with 2.2% of its assets invested in International Seaways Inc.
DFA U.S. Targeted Value Portfolio invests in a broad and diverse group of readily marketable securities of small and mid-cap companies that, according to its advisor are value stocks with higher profitability. DFFVX may purchase or sell futures contracts and options on futures contracts for U.S. equity securities and indices.
DFA U.S. Targeted Value Portfolio has a three-year annualized return of 14.9%. DFFVX has an expense ratio of 0.31% compared with the category average of 1.16%.
Glenmede Small Cap Equity Portfolio invests most of its assets in equity securities, such as common and preferred stocks, of small-cap U.S. companies with market capitalization similar to that of companies listed on the Russell 2000 Index at its last rebalancing. GTSCX chooses to invest in companies that its advisor believes are undervalued.
Glenmede Small Cap Equity Portfolio has a three-year annualized return of 14.2%. Jordan Irving has been one of the fund managers of GTSCX since 2018.
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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