Six Small-Cap Funds With Headroom
Assets have grown in the past five years in many small-cap funds, but these are still taking new investors.
Small-cap stock funds with capacity can be hard to find, especially after a more than five-year bull market in which smaller fare have fared better than larger. Through Nov. 25, 2014, the small-growth, blend, and value Morningstar Categories have outstripped the large-cap style groups by at least a percentage point annualized each. With that in mind, here are some actively managed Morningstar Medalist small-cap funds that remain open and still have some capacity.
With $400 million under management and an average portfolio holding market cap that's less than half that of the Russell 2000 Index and one fourth that of the typical small-blend fund, Berwyn (BERWX), with a Morningstar Analyst Rating of Silver, is run by seasoned managers Lee Grout and Robert Killen. Although its large appetite for tiny companies and relatively focused approach give the fund a bit of an edge, it has compensated for it by buying and holding financially sound, competitively advantaged small- and micro-cap companies. Virtually all of its holdings have some sort of competitive advantage, according to Morningstar equity analysis, which testifies to its high-quality bias. It also has tended to perform like a higher-quality fund, holding up well in rough markets, such as 2008 and 2011, and lagging in the latter stages of buoyant ones, such as 2006 and recent years.
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.