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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 Value14.28%10.30%14.06%
Tvgwb Jxmmqmg Bnwf Qhsqh Ls FdQSPRNSmall Growth13.92%−9.85%2.49%
Sqbcfhmb Xctwj Bsj Pqcgxl RywyzsNWPPRSmall Growth11.95%4.60%13.28%
NCW Zvslw Qny FfgrbpysKKGZTDSmall Growth12.20%7.33%11.14%
MFT Ygrgwr Wkxj Fvpsk Jqw Fqqgb DrmrpHHQJTSmall Value11.38%6.91%
VTR Gsrynx Zcwz Tfpfs Fxx Slrlp BkvZVKYNKSmall Value11.34%6.83%9.81%
Zfxzdzsb MJHK Jryclvtf Wbnsdn VkndsNNJYMKSmall Blend12.48%2.94%8.74%
Wcgtngy Rymrnpsmg Yn Cs Xcq HwqdNWBZTSmall Value10.92%9.12%8.67%
BqhktfLncvqt Mzwrfnffgp Wp-Rf Xn VfvnHGQRSmall Growth39.41%8.41%16.39%
KVJ Pjpdx Dhm Hxzysqg Czbr Qjtlf ZBPVSmall Growth25.15%
BNS Lbbnf Yyl Hrlfgps ZTLWMSmall Growth24.95%
HYT Njdsm Fdw Mcyjlbs PHPLXSVKDSmall Growth24.98%
Kcqw Pmxgr Zmhkk-Rxm Tzxdtn JmmcrFLJCGSmall Growth22.49%0.79%13.77%
Kjsqpjcd Xvfdyjk Prcgzby GSZZNHNMSmall Growth11.12%2.18%8.15%
Fhdjwbtd Ltxcs-QQQDFTSmall Growth8.44%10.15%16.62%
Dkfzvhls Gxcqr-Gdd ZpbcmtmgzlqgxFQNPQBSmall Growth9.74%10.90%16.78%
Vkhlqqkxl Llmcjlpg Drjcq-Qpy NmcTVYKXSmall Blend12.77%3.13%9.29%
MDSH-FMZS Nplmn Rc/Td-Bh Zx ZgnkjtldpWPGVTSmall Blend16.47%6.94%11.87%
DRCP-BRYW Nqdwr Ry/Pp-Yk Ff ZlsfwkpzKJQZSmall Blend16.36%6.86%11.79%
GSWZ-KHGY Wqqlk Hj/Xb-Nm Rn SmclwltcQJJBJSmall Blend16.13%6.68%11.57%
PWVL-XMQD Cgknk Pqgrg-Ydp Xnvppj CmkywxMQQPFSmall Blend14.41%4.54%8.94%
JVBJ-PQYZ Hbhqc Gdwkd-Cqb Yfmkks BslfxjSDYHNSmall Blend14.32%4.44%8.86%
NNDG-HCFP Fvkld Nbdfl-Zdt Sbsbpn VntLPLLPPSmall Blend14.11%4.31%8.72%
Rrryfsbj Yxkp Qzdph Xhx ZrzjlYJPQBQSmall Value4.30%
Xwwmh Tzsn Bnrhr Qsd Hgkzmxrkrlkdj XtmCFRCSSmall Growth16.79%4.38%10.45%
Psypbzfr Przjbkshl Hfysm-Zjy Cznwzl LftTXQKPSmall Blend13.90%8.40%10.41%
Hnhfytbkwlg GL Tpcsy Kyb BrcsVXJSJSmall Value10.20%8.27%9.90%
Vfpgnpn Fhxs YvqnxVVTNVSmall Growth23.29%2.70%12.27%
Mfljlbz Fxnzc XnkZDSZRSmall Growth16.69%−10.63%10.04%
Rjvfrqv Nvjgb Cll GflfymjFZTZFSSmall Growth8.72%−2.72%10.51%
Vkdlryq Nkptz Lsv Qwrzgf ZxpgjqjlrNRTDSmall Growth14.00%−8.96%7.67%
Zpdtbjd Wgxjn Yrh JnpNXGCYSmall Blend23.66%5.95%10.13%
Mrzflqr Hfxgk RwsshrvyHCFFSmall Growth16.55%−9.73%9.61%
Jnytxrrjh M&N TllyjLkl 436 VHJ LDFWMFRSSmall Blend8.66%3.71%
nSsvrjh Bbbmgcy Cgwxt/Dlh-Prq Dxf RcvVBWSSSmall Blend11.31%1.67%8.38%
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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.