5 Strong Buy Small-Cap Growth Mutual Funds

Risk taking investors, who give precedence to capital appreciation over dividend payouts, may consider small-cap growth mutual funds to derive healthy returns. These funds focus on realizing an appreciable amount of capital growth by investing in stocks that are projected to rise in value over the long term.

Meanwhile, small-cap funds are good choices for investors seeking diversification across different sectors and companies. 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. Also, due to their less international exposure, small-cap funds offer higher protection than their large- and mid-cap counterparts against any global downturn.

Below we share with you five top-rated, small-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the fund to outperform its peers in the future. Investors can click here to see the complete list of small-cap growth funds to view their Zacks Rank and past performance.

Brown Advisory Small-Cap Growth Investor (BIASX - MF report) invests a large chunk of its assets in equity securities of small-cap companies domiciled in the U.S. BIASX focuses on acquiring securities of companies that are believed to have strong growth prospects. Brown Advisory Small-Cap Growth Investor has a three-year annualized return of 10.3%.

Christopher A. Berrier is the fund manager of BIASX since 2006.

T. Rowe Price QM US Small-Cap Growth Equity (PRDSX - MF report) seeks capital appreciation over the long run. PRDSX invests a lion’s share of its assets in securities of growth oriented companies with small size market capitalizations. Though PRDSX primarily focuses on acquiring securities of domestic companies, it may also invest not more than 10% of its assets in securities of companies located in foreign lands. T. Rowe Price QM US Small-Cap Growth Equity has a three-year annualized return of 9.9%.

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