Investors with a high-risk appetite and an interest in growth and value investing may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation by capital gains, small-cap funds have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to both growth and value stocks, and owe their origin to a graphical representation of a fund’s equity style box.
Funds investing the majority of their assets in securities of companies with a market capitalization below $2 billion are generally considered small-cap mutual funds. Although funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn, thanks to less international exposure.
Below, we share with you three top-ranked small-cap blend mutual funds, viz., Fidelity Series Small Cap Discovery Fund FJACX, MassMutual Small Cap Opportunities Fund MSCDX and JPMorgan Small Cap Sustainable Leaders Fund VSSCX. 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.
Fidelity Series Small Cap Discovery Fund invests most of its net assets in common stock of small companies that have small market capitalizations similar to companies on the Russell 2000 Index or the S&P SmallCap 600 Index. FJACX advisors choose to invest in domestic or foreign, growth and value stocks.
Fidelity Series Small Cap Discovery Fund has three-year annualized returns of 16.1%. As of January 2023, FJACX held 72 issues, and 3.5% of its assets were invested in INSIGHT ENTERPRISES.
MassMutual Small Cap Opportunities Fund seeks to achieve long-term growth of capital and income by investing primarily in a diversified portfolio of equity securities of smaller companies. MSCDX allocates its assets to publicly traded stocks of companies that have market capitalizations similar to those on the Russell 2000 Index.
MassMutual Small Cap Opportunities Fund has three-year annualized returns of 12.6%. MSCDX has an expense ratio of 0.77% compared with the category average of 1.03%.
JPMorgan Small Cap Sustainable Leaders Fund seeks capital growth over the long term. VSSCX invests most of its assets in equity securities of small-cap companies with market capitalizations equal to those within the universe of S&P SmallCap 600 Index stocks at the time of purchase.
JPMorgan Small Cap Sustainable Leaders Fund has three-year annualized returns of 6.9%. Robert A. Ippolito has been one of the fund managers of VSSCX since 2021.
To view the Zacks Rank and the past performance of all small-cap blend mutual funds, investors can click here to see the complete list of small-cap blend mutual funds.
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