Small-cap funds are a good choice 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 market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Meanwhile, value stocks are stocks that tend to trade at a price that is lower than its fundamentals (i.e. earnings, book value, Debt-Equity). It is common for some investors to invest in value funds for the income or yield. However, not all value funds are comprised solely of 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 the dividend payments divided by the value of the mutual fund’s shares.
Below we will share with you 4 buy-ranked small cap value mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small cap value funds, investors can click here to see the complete list of funds.
Bridgeway Small-Cap Value (BRSVX) seeks total return over the long run. BRSVX maintains a diversified portfolio by investing in securities of small cap companies included in the NYSE, NYSE MKT, and NASDAQ. BRSVX invests a lion’s share of its assets in undervalued small cap stocks. The Bridgeway Small-Cap Value fund has a three-year annualized return of 10%.
BRSVX has an expense ratio of 0.94% as compared to category average of 1.33%.
Columbia Small Cap Value Fund II A (COVAX) invests a large chunk of its assets in ‘value’ stocks of companies having market capitalizations similar to those listed in the Russell 2000 Value Index. COVAX focuses on acquiring common stocks of companies. COVAX may invest a maximum of 10% of its assets in securities of non-US companies, which also include depositary receipts. COVAX may also invest in REITs. The Columbia Small Cap Value Fund II A fund has a three-year annualized return of 13%.
As of July 2015, COVAX held 122 issues with 1.39% of its assets invested in AMERISAFE Inc.
Deutsche Small Cap Value A (KDSAX) seeks long-term capital growth. KDSAX invests a major portion of its assets in domestic small cap companies having market cap size within the range of the Russell 2000 Value Index. KDSAX may also invest not more than one-fifth of its assets in securities of companies located in foreign lands. The Deutsche Small Cap Value A fund has a three-year annualized return of 8.8%