Small-cap growth funds are natural choices for investors with a high-risk appetite when capital appreciation over the long term takes precedence over dividend payouts. These funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term.
Moreover, small-cap funds are good choices for investors seeking diversification across different sectors and companies. These generally invest in companies with a 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 lower international exposure, small-cap funds offer higher protection than their large- and mid-cap counterparts against any global downturn.
Below, we share with you three top-ranked small-cap growth mutual funds, namely Putnam Small Cap Growth PNSAX, T. Rowe Price Integrated US Small-Cap Growth Equity PRDSX and Congress Small Cap Growth Retail CSMVX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Putnam Small Cap Growth invests the majority of its net assets in common stocks of small U.S. companies, focusing on growth stocks. Growth stocks are defined by the fund’s advisors as stocks whose earnings are expected to grow faster than those of similar firms.
Putnam Small Cap Growth has a three-year annualized return of 6.8%. As of June 2024, PNSAX held 92 issues, with 2.2% of its assets invested in Nova Limited.
T. Rowe Price Integrated US Small-Cap Growth Equity invests the majority of its assets in common stocks of small-cap growth companies in the United States. It defines small-cap growth companies as those whose market capitalization, at the time of purchase, falls within the range of companies in the MSCI US Small Cap Growth Index.
T. Rowe Price Integrated US Small-Cap Growth Equity has three-year annualized returns of 6.5%. PRDSX has an expense ratio of 0.80% compared with the category average of 1.03%.
Congress Small Cap Growth Retail seeks long-term capital growth by investing most of its assets in common stocks of small-cap companies across all sectors of the economy. CSMVX advisors define small-cap companies as companies with market-cap equivalent to the companies listed in the Russell 2000 Growth Index at the time of purchase.
Congress Small Cap Growth Retail has a three-year annualized return of 5.7%. Gregg A. O’Keefe has been one of the fund managers of CSMVX since September 2017.
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