Investors with a high-risk appetite and an interest in growth and value investing may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation through capital gains, small-cap funds have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to growth and value stocks and owe their origin to a graphical representation of a fund’s equity style box.
Funds investing the majority of their assets in securities of companies with a market capitalization below $2 billion are generally considered small-cap mutual funds. Although funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are 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 blend mutual funds, viz., Vanguard Strategic Small-Cap Equity Inv VSTCX, MassMutual Small Cap Opps MSCDX and FullerThaler Behavioral Sm-Cp Eq Inv FTHNX. 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.
Vanguard Strategic Small-Cap Equity Inv invests most of its net assets in domestic equity securities of small-capitalization companies, which its advisors believe have strong growth prospects as well as reasonable valuations with respect to their industry peers.
Vanguard Strategic Small-Cap Equity Inv has three-year annualized returns of 11.6%. As of June 2024, VSTCX held 544 issues, with 0.9% of its assets invested in Tenet Healthcare Corp.
MassMutual Small Cap Opps funds seek to achieve long-term growth of capital and income by investing primarily in a diversified portfolio of equity securities of smaller companies. MSCDX its assets in publicly traded stocks of companies with market capitalizations, at the time of purchase, in the range of companies in the Russell 2000 Index, the fund’s benchmark.
MassMutual Small Cap Opps has three-year annualized returns of 8.1%. MSCDX has an expense ratio of 0.76%.
FullerThaler Behavioral Sm-Cp Eq Inv fund invests most of its net assets in common stocks of small-cap companies based in the United States.
FullerThaler Behavioral Sm-Cp Eq Inv has three-year annualized returns of 15.1%. Raife Giovinazzo has been one of the fund managers of FTHNX since 2013.