3 Top Small-Cap Value Mutual Funds To Add To Your Portfolio

Small-cap value mutual funds provide excellent choices for investors who are looking for bargain, i.e., stocks at a discount, with an impressive growth potential. Value mutual funds are those that invest in stocks trading at a discount to book value, have low price-to-earnings ratio and high dividend yields. Value investing is always a very popular strategy, and for a good reason.

Investors with a high risk appetite also find small-cap funds intriguing as small market capitalization has a higher growth potential than large or mid-cap companies. Small-cap funds generally invest in companies with a market cap below $2 billion. Also, small-cap funds are expected to provide diversification across sectors and companies.

Below we share with you three top-rated, small-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of all small-cap value mutual funds, their Zacks Rank and past performance.

AB Discovery Value Advisor ABYSX invests the lion’s share of its assets in equity securities of various small- and mid-cap companies, which are included on the Russell 2500(R) Value Index. ABYSX seeks appreciation of capital for the long run. AB Discovery Value Advisor returned 23.9% over the past one year.

As of February 2017, ABYSX held 90 issues, with 1.85% of its assets invested in Huntington Bancshares (NASDAQ:HBAN) Inc.

T. Rowe Price Small-Cap Value Fund No Load PRSVX invests the majority of its assets in companies with market capitalization within the range of the Russell 2000 Index. It may also invest in securities of companies located in foreign lands. Further, PRSVX may choose to sell its securities to restrict losses and reallocate assets in other securities with higher prospects. T. Rowe Price Small-Cap Value Fund No Load returned 28.8% over the past one year.

J. Wagner is the portfolio manager of PRSVX since 2014.

Northern Small Cap Value NOSGX invests a bulk of its assets in companies having market capitalization within the universe of the Russell 2000 Value Index. NOSGX may focus on a specific sector like finance in managing its investment goal. Companies that are included in the fund’s portfolio generally pay low or no dividend. Northern Small Cap Value returned 25.8% over the past one year.

NOSGX has an expense ratio of 1.00% compared with the category average of 1.21%.

To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of funds.

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