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 will share with you 4 buy-rated small-cap blend mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong 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 blend mutual funds, investors can click here to see the complete list of funds .
Fidelity Stock Selector Small Cap (FDSCX – MF report) seeks capital growth by investing its assets across a wide range of sectors. FDSCX invests a major portion of its assets in common stocks of companies having market capitalizations within the universe of the Russell 2000 Index or the S&P SmallCap 600 Index. The Fidelity Stock Selector Small Cap fund has a three-year annualized return of 7.2%.
As of October 2015, FDSCX held 207 issues, with 1.75% of its total assets invested in Bank of the Ozarks Inc.
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 a three-year annualized return of 8.9%.
