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5 Small-Cap Funds With Room to Run

I sought out funds that are below the median point at which small-cap funds close.

In my last column, I wrote about the levels at which funds typically close to new investors. This time out, I thought I'd share some funds that pass those size hurdles. You may recall that the median small-cap fund closed at $1.3 billion and the average was $2.2 billion.

In the table below, I list funds with total asset bases below the median closing point and below the average closing point. All of them are Morningstar Medalists.

I'll share a few thoughts on the subset of funds that are below the median and available through No Transaction Fee networks.

The fund returned 8.6% annualized from its 2005 inception through September 2017. That topped the peer group's 7.6% annualized return but was a hair behind the 9.1% return for Russell 2000 Growth Index. However, the fund looks even better on a risk-adjusted basis, as it has had above-average returns with below-average risk. The fund charges 1.16% for its A shares.

Best of the Rest

There are two very appealing Silver medalists in the second group of NTF-available funds that are above the median closing asset level but below the average closing point.

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About the Author

Russel Kinnel

Director
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Russel Kinnel is director of ratings, manager research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He heads the North American Medalist Rating Committee, which vets the Morningstar Medalist Rating™ for funds. He is the editor of Morningstar FundInvestor, a monthly newsletter, and has published a number of prominent studies of the fund industry covering subjects such as manager investment, expenses, and investor returns.

Since joining Morningstar in 1994, Kinnel has analyzed virtually every type of fund and has covered the most prominent fund families, including Fidelity, T. Rowe Price, and Vanguard. He has led studies on the predictive power of fund data and helped develop the Morningstar Rating for funds and the Morningstar Style Box methodology. He was co-author of the company's first book, Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Wiley, 2003), and was author of the book Fund Spy: Morningstar's Inside Secrets to Selecting Mutual Funds That Outperform, published in 2009.

Kinnel holds a bachelor's degree in economics and journalism from the University of Wisconsin.

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