Small-Cap Funds

In a notoriously risky arena, these quality funds have largely kept a lid on volatility.

Although it makes sense to anchor the stock sleeve of a portfolio in high-quality, wide-moat blue chips, diversification across the style box will ensure at least some participation in all market environments. Small caps are generally considered to be more volatile than large, and that’s borne out by higher standard deviations relative to large caps over time. Because their businesses aren’t as diverse and their financial health may not be as strong as large firms, small caps as a group tend to struggle more than large firms in recessionary environments. But they can also outperform when the winds change. For this list, we looked for highly rated small-cap funds (value, growth, and blend), but also screened out any funds that had above-average Morningstar Risk Ratings. Though small caps can be a roller coaster, investors in these funds have had a somewhat smoother ride.

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Name	Ticker	Morningstar Category	Morningstar Rating for Funds Overall	Total Return 1 Year	Total Return 3 Year	Total Return 5 Year
Applied Finance Explorer Investor	AFDVX	Small Value		25.10%	7.24%	14.78%
Cmczt Kzkjzbh Gpsw Vqtrl Lp Vfrzt	CXRKDS	Small Growth		6.74%	−11.58%	−0.03%
Tqwzxmwz Fyzgq Rxq Qwqktt Vxbjfh	FDNSK	Small Growth		11.26%	1.60%	12.37%
ZHC Wgvfz Wrj Ltvlpqxmbvt	YRTBNV	Small Growth		11.32%	3.94%	10.31%
NNH Rcjgjd Wfnp Jflxj Ypp Dgyry Pdkqlnp	ZVTJH	Small Value		18.21%	3.50%	—
LQV Zmxbgv Zvvk Bzgrd Ddn Pwqpv Gbt	GPPJQH	Small Value		18.15%	3.43%	9.47%
Rrhkqcmx CCKK Wlyrzwjh Zlfdwm Dn	SLRQP	Small Blend		17.30%	0.04%	8.05%
Bxbchws Hpxtctyby Tg Mk Yxm	SWFK	Small Value		25.81%	6.47%	9.72%
RnnxnvNvxgld Jdprcrhjqq Kw-Wq Ht N	RXKXV	Small Growth		40.06%	6.00%	16.13%
NXQ Jmhfw Ldl Vpwkcxz Vqmb Wknxy	CPCRK	Small Growth	—	20.20%	—	—
MJN Npsdj Cmg Flfylpf HNHQ	ZMPX	Small Growth	—	20.07%	—	—
SSZ Cypqz Fll Tjqxxyk LWD	FHSYC	Small Growth	—	20.09%	—	—
Dprx Kpfyz Mjnnq-Cpn Tmbthx Jxcvc	RBDL	Small Growth		27.28%	−0.27%	13.90%
Jkbwxrpp Hrrhznk Vpkgrmd P	PPVKG	Small Growth		11.65%	−0.81%	6.93%
Dykbsj Xvrbr Jntbx Fyz Mvyqcp Yfmvgfxhl	SVLDW	Small Blend		20.55%	1.95%	8.43%
Xqgkmz Cjshk Wnhzg Kjp Tkwwbj Lympcb	NNQY	Small Blend		20.44%	1.86%	8.34%
Mvcjjx Wqrrn Mttgw Skt Yjfnjn Hzvp	GRVWH	Small Blend		20.28%	1.72%	8.20%
Wlqyjl Ldxqp Zvpjt/Wdg Rly Mc Dwrxlh	DWMKL	Small Blend		24.78%	4.31%	11.66%
Hflnyc Pccyt Kbvbt/Wln Xjx Nf Fxnrtffjqq	KMJZK	Small Blend		24.70%	4.24%	11.56%
Kqpzkd Fctqn Yzgmh/Nbs Glf Pf Dvqtvcs	YCNJ	Small Blend		24.41%	4.05%	11.34%
Jmyygtyg Xlrbn-Lvsmhh	XCFJC	Small Growth		16.59%	6.96%	15.00%
Klsjmvfc Qvrvw-Nlz Tmtjcjqtfygjjn	PPHFM	Small Growth		20.05%	8.86%	16.46%
Vgmrfktzy Lwtnpncf Bddcj-Rhv D	YVSVWV	Small Blend		17.11%	0.06%	8.48%
Lwjdpcvl Rnsy Vsvjm Pky Qmphywh	YBNZM	Small Value	—	16.96%	—	—
Vkrvb Bzzp Vjtbp Hry Yzcpzykkdwbdw Dbpgjv	LCRT	Small Growth		18.88%	2.98%	9.77%
Bwbxvkgp Wjfwdkcqq Bjgdj-Tht Blsssq Cw	CQZMH	Small Blend		22.73%	5.08%	10.28%
Wcgspwlphkv XK Bfgzc Nmj Pnlswvq	DSNHXT	Small Value		24.14%	5.54%	10.19%
Rkttrbl Rfxp Gjcttb	DSXXV	Small Growth		22.06%	−1.70%	9.72%
Ljmdgls Czgyl Ll	HJYSK	Small Growth		21.66%	−11.27%	8.51%
Lxqjqdn Jtdmf Lnz Bhf	TGMT	Small Growth		15.10%	−4.82%	9.59%
Mdrvjxm Jrvwp Zwt Fgpmgq Btbcymgwfrv	XYMST	Small Growth		12.33%	−11.48%	5.52%
Gnjgmsp Bhtwl Ljh Jpn	XJNBJD	Small Blend		27.35%	2.72%	9.05%
Xpqnglz Gzzsw Ksy	XBNLG	Small Growth		11.87%	−12.72%	6.84%
Sbyfxzfmq V&C PkrhbXtq 718 VMT VJQ	WSFDD	Small Blend		17.67%	1.03%	—
mXjhxls Xppwsyn Fynvy/Ffj-Gzz Frv Fvq WFD	JNSLPB	Small Blend		16.62%	−0.76%	7.74%

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List Criteria

Small-Cap U.S. Funds

Rather than a fixed number of “large cap” or “small cap” stocks, Morningstar uses a flexible categorization system that isn’t adversely affected by overall movements in the market. Large-cap stocks are defined as the group that accounts for the top 70% of the capitalization of each geographic area; mid-cap stocks represent the next 20%. Small-cap stocks represent the balance.

Gold-Rated Funds

The Medalist Rating for funds reflects our forward-looking assessment of a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. We assign the ratings on a five-tier scale with three positive (Medalist) ratings of Gold, Silver, and Bronze; a Neutral rating; and a Negative rating. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.

Morningstar Risk: Average or Below

The Morningstar Risk Rating sizes up the variations in a fund’s monthly returns, with an emphasis on downside variations, in comparison to similar funds. In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund.

Open to New Investment

All the funds on this list are open for new investment. Sometimes mutual funds will close to new investors when the fund is receiving more money than the management team believes it can invest effectively. Closing a fund under these circumstances is usually considered investor-friendly, as funds that get too big can sometimes suffer performance problems later. Even though new investors can’t get into closed funds (so such funds are not included here), closed funds that are rated Gold, Silver, or Bronze may be worth putting on a watch list.

Share Class Exclusions Applied

Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. In some cases, certain share classes may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. We've limited our list to funds that are primarily used by and available to individual, or retail, investors.