A small-cap value fund is a good choice for investors seeking diversification across sectors and companies, and focusing on gaining exposure to stocks that are trading at discounts. 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 those that tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity). It is a common practice to invest in value funds for income or yield. However, not all value funds solely comprise 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, which is the dividend payout divided by the value of the mutual fund’s shares.
Below we share with you three top-rated, small-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of small-cap value funds .
Eagle Smaller Company A EGEAX seeks capital growth. EGEAX invests a major portion of its assets in the equity securities of small-cap companies. Such companies have a market capitalization equal to or less than the largest company listed in the Russell 2000 Index during the most recent 12-month period. The Eagle Smaller Company A fund has a three-year annualized return of 5.7%.
As of March 2016, EGEAX held 103 issues with 1.86% of its assets invested in Ellie Mae Inc.
Perkins Small Cap Value C JCSCX invests a large chunk of its assets in common stocks of undervalued small-cap companies. JCSCX invests in securities of companies with market capitalization similar to those listed in the Russell 2000 Value Index. JCSCX may invest a maximum of 20% of its assets in cash or equivalents. The Perkins Small Cap Value C fund has a three-year annualized return of 7.8%.
Robert H. Perkins is one of the fund managers of JCSCX since inception.
Glenmede Small Cap Equity Advisor GTCSX seeks growth of capital over the long run. GTCSX invests the major portion of its assets in equity securities including common stocks of domestic undervalued companies. GTCSX invests in securities of companies having market capitalization similar to those included in the Russell 2000 Index. The Glenmede Small Cap Equity Advisor fund has a three-year annualized return of 7.3%.
As of January 2016, GTCSX held 99 issues with 1.96% of its assets invested in Western Alliance Bancorp.
To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of funds .
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank.
Get Your Free (EGEAX): Fund Analysis Report
Get Your Free (JCSCX): Fund Analysis Report
Get Your Free (GTCSX): Fund Analysis Report
Original post
Zacks Investment Research