Investors looking to invest in a portfolio that provides significant exposure to both value and growth stocks, and wanting to diversify their investments across a wide range of sectors and companies may consider small-cap blend mutual funds. Blend funds or “hybrid funds” owe their origin to a graphical representation of a fund’s equity style box and aim for value appreciation by capital gains.
Meanwhile, small-cap companies are believed to be less affected by a global downturn thanks to limited international exposure. Though funds investing in small-cap stocks are believed to be more volatile than funds with a more large or mid-cap focus, these are expected to have higher growth prospects than their large and medium counterparts. Companies with market capitalization lower than $2 billion are generally considered small-cap firms.
Below we share with you three top-rated, small-cap blend 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 blend mutual funds, investors can click here to see the complete list of small-cap blend funds .
TIAA-CREF Small-Cap Equity Retail (TCSEX - MF report) seeks favorable return over the long term. TCSEX invests heavily in domestic small-cap companies having market capitalizations identical to those included in the Russell 2000 Index. TCSEX primarily invests in small sized companies across different sectors. The TIAA-CREF Small-Cap Equity Retail fund has returned 4.3% over the past three months.
As of October 2015, TCSEX held 313 issues, with 1.73% of its assets invested in 10802s Trs Usd P E Short Ru20intr.
SSgA Dynamic Small Cap N (SVSCX - MF report) invests a large chunk of its assets in equity securities of companies listed in the Russell 2000 Index. SVSCX may also invest a maximum of 20% of its assets in securities of companies that are not included in the index. The SSgA Dynamic Small Cap N fund has returned 4% over the past three months.
SVSCX has an expense ratio of 1.10% as compared to the category average of 1.24%.
Lord Abbett Alpha Strategy A (ALFAX - MF report) seeks growth of capital over the long term. ALFAX is a “fund of funds” that generally invests in mutual funds of Lord, Abbett & Co. LLC. ALFAX invests in value and growth stocks of companies located all over the world. ALFAX invests in companies having micro, small and mid-cap capitalizations. The Lord Abbett Alpha Strategy A fund has returned 2.2% over the past three months.
Robert I. Gerber is one of the fund managers of ALFAX since 2005.
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