A small-cap value fund is a good choice for investors seeking diversification across sectors and companies, and focusing on gaining exposure to stocks trading at a discount. Investors with a high-risk appetite tend to invest in these funds. Small-cap funds generally invest in companies having a market cap of less than $2 billion. The companies, smaller in size, offer growth potential and can subsequently see an increase in market capitalization.
Value stocks are those that trade at a price lower than their fundamentals (i.e., earnings, book value, debt equity). It is a common practice to invest in value funds for income or yield.
However, not all value funds comprise only those companies that primarily use their earnings to pay out dividends. Investors interested in picking value funds for yield should check the mutual fund yield, which is the total dividend payout divided by the value of the mutual fund’s shares.
Below, we share with you three top-ranked small-cap value mutual funds, namely, Bridgeway Small Cap Value Fund BRSVX, Bridgeway Omni Tax-Managed Small-Cap Value Fund BOTSX and Invesco Small Cap Value Fund VSCAX. Each has 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 Small Cap Value mutual funds.
Bridgeway Small Cap Value Fund seeks a long-term total return on capital by capital appreciation. BRSVX invests the majority of its net assets in stocks listed on the New York Stock Exchange, NYSE American and Nasdaq in the small-cap value category.
Bridgeway Small Cap Value Fund has a three-year annualized return of 20.1%. As of September 2022, BRSVX held 133 issues, with 2.2% of its assets invested in International Seaways.
Bridgeway Omni Tax-Managed Small-Cap Value Fund seeks long-term total return on investment, largely through capital appreciation. BOTSX invests in a wide range of small-cap stocks that are considered to be value equities.
Bridgeway Omni Tax-Managed Small-Cap Value Fund has a three-year annualized return of 11%. BOTSX has an expense ratio of 0.47% compared with the category average of 1.16%.
Invesco Small Cap Value Fund seeks long-term capital growth by investing the majority of its net assets in the under-valued securities of small-cap companies. VSCAX invests primarily in common stock.
Invesco Small Cap Value Fund has a three-year annualized return of 16.4%. Jonathan Mueller has been one of the fund managers of VSCAX since 2010.
To view the Zacks Rank and the past performance of all small-cap value mutual funds, investors can click here to see the complete list of small cap value mutual funds.
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