Grab These 3 Small-Cap Growth Mutual Funds for Steady Returns

Small-cap growth funds are natural choices for investors with a high-risk appetite when capital appreciation over the long term takes precedence over dividend payouts. These funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term.

Moreover, small-cap funds are good choices for investors seeking diversification across different sectors and companies. These generally invest in companies with a market cap lower than $2 billion. The companies, smaller in size, offer growth potential, and their market capitalization may increase subsequently. Also, due to their lower international exposure, small-cap funds offer higher protection than their large- and mid-cap counterparts against any global downturn.

Below, we share with you three top-ranked small-cap growth mutual funds, namely Putnam Small Cap Growth PNSAX, North Square Spectrum Alpha Fund ORIGX and Congress Small Cap Growth Retail CSMVX. 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.

Putnam Small Cap Growth invests the majority of its net assets in common stocks of small U.S. companies, focusing on growth stocks. Growth stocks are defined by the fund’s advisors as stocks whose earnings are expected to grow faster than those of similar firms.

Putnam Small Cap Growth has a three-year annualized return of 10.2%. As of December 2024, PNSAX held 97 issues, with 2.5% of its assets invested in Vertex.

North Square Spectrum Alpha Fund invests in affiliated mutual funds managed by the advisor. Usually, through the underlying funds, the fund is expected to indirectly invest in the equity securities of U.S. and foreign micro-cap, small, and mid-sized companies, among others.        

North Square Spectrum Alpha Fund has three-year annualized returns of 6.7%. ORIGX has an expense ratio of 0.94%.

Congress Small Cap Growth Retail seeks long-term capital growth by investing most of its assets in common stocks of small-cap companies across all sectors of the economy. CSMVX advisors define small-cap companies as companies with market-cap equivalent to the companies listed in the Russell 2000 Growth Index at the time of purchase.

Congress Small Cap Growth Retail has a three-year annualized return of 5.9%. Gregg A. O’Keefe has been one of the fund managers of CSMVX since September 2017.

To view the Zacks Rank and the past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth mutual funds.

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This article originally published on Zacks Investment Research (zacks.com).

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