Skip to Content
Our Picks

Small-Cap Index Beaters

These actively managed funds invest in smaller companies and have beaten an index proxy during five- and 10-year periods.

Mentioned: , , ,

For investors following a core-and-explore approach--that is, using index funds as the base of a portfolio and actively managed funds for complementary holdings--small-cap funds are often regarded as an area in which active management can add value over passive management. The conventional wisdom is that small-cap stocks are usually less well-known and less widely held than their large-cap counterparts, making them an area ripe for talented active fund managers to use their stock-picking skills, not to mention putting together portfolios that look less indexlike.

This week our Index Beaters series looked for actively managed small-cap stock funds that have outperformed during medium (five-year) and longer (10-year) terms. As we've done in previous installments, we'll use an index proxy as our benchmark, this time in the form of the  Vanguard Small Cap Index (NAESX) fund, a low-cost offering that tracks the MSCI U.S. Small Cap 1750 Index (prior to May 2003 it tracked the Russell 2000 Index).

To view this article, become a Morningstar Basic member.

Register for Free

Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.