When capital appreciation over the long term takes precedence over dividend payouts, growth funds become a natural choice for investors. These funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms whose value is projected to rise over the long term. However, a relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because they may experience relatively more fluctuations than other fund classes. Meanwhile, 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.

Below we will share with you 5 small cap growth mutual funds. Each has earned 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 growth funds, investors canclick here to see the complete list of funds.

T. Rowe Price Diversified Small Cap Growth (PRDSX - MF report) invests a large chunk of its assets in growth oriented companies having market capitalizations similar to those listed in the MSCI US Small Cap Growth Index. PRDSX is expected to maintain a diversified portfolio with a maximum of half of its assets invested in the top 25 holdings. The T. Rowe Price Diversified Small Cap Growth fund has returned 12.4% in the year-to-date frame.

Sudhir Nanda is the fund manager and has managed PRDSX since 2006.

ClearBridge Small Cap Growth A (SASMX - MF report) seeks capital appreciation over the long run. SASMX invests a major portion of its assets in equities of small cap firms. SASMX invests in domestic companies that believed to have impressive growth prospect. The ClearBridge Small Cap Growth A fund has returned 5.5% in past one year.

SASMX has an expense ratio of 1.24% as compared to category average of 1.35%.

Eaton Vance Small-Cap A (ETEGX - MF report) invests a lion’s share of its assets in small cap firms having above-average growth potential. ETEGX focuses on acquiring common stocks of companies. ETEGX may invest a maximum of one-fourth of its assets in non-US companies including those from emerging economies. The Eaton Vance Small-Cap A fund has returned 7.5% in past one year.

As of March 2015, ETEGX held 64 issues with 2.43% of its assets invested in West Pharmaceutical Services Inc.

WesMark Small Company Growth (WMKSX - MF report) seeks long-term capital growth. WMKSX maintains a diversified portfolio by investing a large portion of its assets in small cap companies. WMKSX defines small cap companies as those which have market cap size within the universe of the Russell 2000 Index or the Standard & Poor's SmallCap 600 Index. The WesMark Small Company Growth fund has returned 2% in past one year.

WMKSX has an expense ratio of 1.22% as compared to category average of 1.35%.

TCW Small Cap Growth I (TGSCX -MF report) invests a majority of its assets in companies having market capitalizations identical to those included in the Russell 2000 Growth Index. TGSCX may also invest in non-US firms including those located in developing and emerging countries, and ADRs. The TCW Small Cap Growth I fund has returned 13.5% in past one year.

Chang Lee is the fund manager and has managed TGSCX since 2012.