Small-Cap Index Beaters
These actively managed funds invest in smaller companies and have beaten an index proxy during five- and 10-year periods.
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).
Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.