Risky investors who prefer capital appreciation over dividend payouts may consider investing in small-cap growth mutual funds. Growth funds focus on realizing appreciative capital growth by investing in stocks that are expected to appreciate in value over the long term. Meanwhile, small-cap funds are good choices for investors seeking diversification across sectors and companies.
Small-cap funds generally invest in companies with a market capitalization of less than $2 billion. The companies, being smaller in size, offer growth potential, and market capitalization may increase further. Less international exposure leaves less currency vulnerable to a stronger US dollar. Although small-cap stocks are believed to generate higher returns, they are expected to be more volatile than large- and mid-cap companies. Also, growth funds may experience more volatility than other fund classes.
Below, we share with you three small cap growth mutual funds. Oberweis Small-Cap Opportunities Fund (Obsox – free report), Buffalo Small Cap Fund Inc. (BUFSX – free report) and Paradigm Micro-Cap Fund (PVIVX – free report). 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 view the full list of funds.
Oberweis Small-Cap Opportunities Fund It invests the majority of its net assets in common stocks of small companies with a market capitalization of less than $5 billion or in the range of companies listed on the Russell 2000 Index at the time of acquisition. OBSOX Advisors chooses to invest in the securities of companies that the fund advisor believes have the potential to generate long-term growth in market value.
Oberweis Small Cap Opportunities Fund has three-year annualized returns of 22.7%. In the year At the end of June 2022, OBSOX had 74 issues and 3.89% of its assets were invested in Lantheus Holdings Inc.
Buffalo Small Cap Fund Inc. It invests most of its assets in equity securities of small cap companies such as common stocks, preferred stocks, convertible preferred stocks, warrants and rights. The BUFSX Advisor defines small-cap companies as having the market capitalization of companies listed on the Russell 2000 Growth Index at the time of purchase.
Buffalo Small Cap Fund Inc. It has three-year annualized returns of 10.3%. BUFSX has an expense ratio of 1.01% compared to the category average of 1.21%.
Paradigm Micro-Cap Fund It invests most of its net assets in common stocks of US micro-cap companies. PVIVX advisors make investment decisions based on the advisor’s assessed value or new investment opportunities with higher expected returns.
Paradigm Micro Cap Fund has three-year annualized returns of 18.5%. Candace King Weir has been one of the PVIVX fund managers since December 2011.
To view the Zacks Rank and past performance of small-cap growth mutual funds, investors can click here to view the full list of small-cap growth mutual funds.
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