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 buy 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, DFA US Small Cap Value (DFSVX – Free Report) , Sterling Capital Behavioral Small Cap Value Equity (SPSAX – Free Report) and Vericimetry US Small Cap Value (VYSVX – Free Report) . 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.
DFA US Small Cap Value seeks long-term capital appreciation by investing in securities of small-cap U.S. companies. DFSVX advisors also invest in value stocks and securities having a high book value compared to their market value.
DFA US Small Cap Value has three-year annualized returns of 10.1%. DFSVX has an expense ratio of 0.31%.
Sterling Capital Behavioral Small Cap Value Equity seeks a long-term total return on investment. SPSAX invests in small-cap companies, defining them as firms with market capitalizations within the range of those companies on the Russell 2000 Index at the time of purchase.
Sterling Capital Behavioral Small Cap Value Equity has three-year annualized returns of 8.1%. As of December 2023, SPSAX held 233 issues, with 1.4% of its assets invested in Boise Cascade.
Vericimetry US Small Cap Value invests most of its assets in the common stock of domestic small-cap value companies at the time of purchase. VYSVX advisors invest in companies based on a market-cap-weighted approach to determine the target weights of U.S. small-cap value stocks.
Vericimetry US Small Cap Value has three-year annualized returns of 8.1%. Mendel Fygenson has been one of the fund managers of VYSVX since September 2014.
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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