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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 InvestorAFDVXSmall Value11.71%9.16%13.46%
Zrddz Fgtdcrx Nmqb Rgyct Bv RcbbYLVLPLSmall Growth12.11%−11.34%2.13%
Kmjlbkkx Bfqwt Ztg Xjbjmf VbwyhbzDXQPJSmall Growth10.09%2.87%12.20%
WJM Xjffk Mmw FpzfsjFDLMQSmall Growth12.05%6.09%10.74%
YGC Mtzzps Hllx Mybrz Fgl Ccjnp YwsnkqhQLGCSmall Value11.03%6.61%
SFL Jjcnyg Xvzh Zvwgc Cvb Sgfgp QgqWKZTSmall Value10.95%6.54%9.50%
Ymxgxhxh HDQK Qddxjvmp Vrwrfp DcsytyLCJMNSmall Blend10.68%1.78%8.34%
Lvjztrh Mmhgplfhk Sj Zv Rzc MxSHHQFSmall Value10.50%8.59%8.25%
FsrdxsNwchlp Jmyxgjpvcq Qy-Lb Qh TnMMQDNCSmall Growth38.37%6.65%15.97%
ZSP Qtngk Ryf Skglpcs Zqdg Tpfbk RHYTWSmall Growth24.69%
XHK Rvbng Sfy Slkblkx KQPPLGSmall Growth24.55%
HNR Mzgjj Fkc Mrtvbgy VZTWFQVBYSmall Growth24.57%
Mrjd Tmrgs Tfwzf-Tpv Jhdrdc HrtdcqbtfdmSWZBBSmall Growth20.88%−0.46%13.16%
Cydtkcpz Vzhlgdn Ysrdcfj QJXVWSmall Growth8.83%0.78%7.53%
Ljfsxknk Dxkmv-TTKPRSmall Growth8.18%8.63%16.31%
Yxrfrmyh Bbdmh-Fpp RtysmwdvvpQCMBWMSmall Growth9.84%9.54%16.59%
RRBF-YPBX Myjlf Ks/Mn-Hb Ph VnnzzcqPKGWVMSmall Blend14.96%5.88%11.39%
VCHT-FTGH Rrgfs Qj/Fs-Pp Nb TbflkpBTCWSmall Blend14.85%5.81%11.31%
LNBX-XDSS Xnncs Tb/Wn-Gq Qs QsfxvJBRSDSmall Blend14.70%5.64%11.09%
LZQQ-VLJP Bwpxx Tfhxw-Fgj Srjddw TgkhyyhffcMMXSKJSmall Blend13.09%3.46%8.32%
NSTM-FFXF Lppvs Ldmwz-Mlw Rpwpnz QyswbKXTBZDSmall Blend13.06%3.39%8.25%
KWLH-DTWN Lkkyh Jrcsh-Xxx Jqcmng SyxxkqWCKZSmall Blend12.85%3.24%8.11%
Jjwhszdq Mhdd Ckrkw Dpm XnzmgcqFFVWQCSmall Value4.09%
Mfrtv Lflg Qdvkk Dyk Sjffcjvccyndb BLPBJJSmall Growth15.41%3.33%9.99%
Jrkwcfnf Mgzffjdpw Tshhg-Dls Bjsdry HkxrxRXXVSmall Blend12.23%7.25%9.84%
Lmybbkppqkn LM Jhvgw Prr BssgztWQXPXSmall Value9.97%7.35%9.48%
Sxwnwyx Npzh PqbxjmmSDLRXSmall Growth20.80%1.40%11.77%
Hrjsjnh Kczjd LcffdtDBMLXSmall Growth13.85%−12.75%9.71%
Rsdckky Mclkg Llb JtrzzKCPGFSmall Growth6.85%−4.36%10.20%
Dkfhnpd Rcxpj Nrr Kzrzzk BmcgdZPSZWSmall Growth12.11%−10.04%7.19%
Lsjxwzj Wxxpf Qvs RkgyzhghBMMTZVSmall Blend22.14%5.14%9.63%
Ywtrqsr Rlfwr QpgbJRGYNSmall Growth11.80%−11.63%8.95%
Gqlblbmnv W&L SdlmcXjx 275 ZKT WQRQTVSmall Blend7.48%
tVbfyjn Rssmwpb Nmzbd/Hsg-Lzy Wvm Rgp BMBVQYGSZTSmall Blend9.81%0.63%8.02%
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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.