Small-cap blend funds are a type of equity mutual fund which holds in its portfolio a mix of value and growth stocks, where the market capitalization of the stocks are generally lower than $2 billion. Blend funds are also known as "hybrid funds". Blend funds aim for value appreciation by capital gains. It owes its origin to a graphical representation of a fund's equity style box. In addition to diversification, blend funds are great picks for investors looking for a mix of growth and value investment. Meanwhile, small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds.
Below we will share with you 5 buy-ranked small-cap blend mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy) as we expect these mutual funds to outperform their peers in the future.
QS Batterymarch U.S. Small Capitalization Equity Portfolio (MUTF:LGSCX) invests a large chunk of its assets in securities of small cap companies. LGSCX primarily invests in domestic companies or those which operate predominantly in the U.S. LGSCX may also invest in non-US firms through ADRs. The QS Batterymarch U.S. Small Capitalization Equity Portfolio fund has a 3-year annualized return of 22.3%.
Stephen A. Lanzendorf is the fund manager and has managed LGSCX since 2006.
American Century Small Company Fund (MUTF:ASQIX) seeks long-term capital appreciation. ASQIX invests a major portion of its assets in common stocks of small sized companies. ASQIX invests in companies having market capitalizations similar to those included in the Russell 2000 Index. The American Century Small Company Fund has a 3-year annualized return of 21.7%.
ASQIX has an expense ratio of 0.87% compared to a category average of 1.23%.
Fidelity Advisor Small Cap Fund A (MUTF:FSCDX) invests a lion's share of its assets in companies having market capitalizations within the range of either the Russell 2000 Index or the S&P SmallCap 600 Index. FSCDX uses "blend" strategy to invest in common stocks of companies. The Fidelity Advisor Small Cap Fund A has a 3-year annualized return of 22.6%.
As of February 2015, FSCDX held 107 issues, with 7.85% of its total assets invested in Russell 2000 Index Mini TIC.
Principal SmallCap S&P 600 Index Fund Retirement (MUTF:PSSMX) seeks capital appreciation over the long run. PSSMX invests a majority of its assets in firms listed in the Standard & Poor's SmallCap 600 Index. PSSMX also invests in index futures and equity ETFs in order to reduce tracking error by gaining exposure to the index. The Principal SmallCap S&P 600 Index Fund Retirement has a 3-year annualized return of 20.7%.
Thomas L. Kruchten is the fund manager and has managed PSSMX since 2011.
TIAA-CREF Small-Cap Equity Retail Fund (MUTF:TCSEX) invests heavily in domestic small cap companies having market capitalizations identical to those included in the Russell 2000 Index. TCSEX primarily invests in small sized companies across different sectors. The TIAA-CREF Small-Cap Equity Retail Fund has a 3-year annualized return of 21.4%.
TCSEX has an expense ratio of 0.78% compared to a category average of 1.23%.