NESGX Needham Small Cap Growth Fund - Retail Class (MM)

Investors looking to mop up handsome gains over a short run often invest in small cap funds. Though riskier in character than other fund categories, these funds have the ability to deliver appreciably higher returns due to two primary reasons. Firstly, they generate high volumes of sales in a booming market, leading to a rise in prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This reassures shareholders of better performance over the long term.

Below we will share with you 5 top rated small-cap mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small-cap funds, then click here.

WesMark Small Company Growth (WMKSX) seeks capital growth. The fund invests the majority of its assets in small-cap companies. It focuses on acquiring equity securities which are identical to those included in the Russell 2000 Index or the S&P Small Cap 600 Index. The small-cap mutual fund returned 7.52% over the last one year period.

The small-cap mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.32% compared to a category average of 1.48%.

Manning & Napier Small Cap A (MNSMX) invests heavily in small cap companies. These firms must have market capitalizations lower than $3 billion. The fund may invest in both domestic and foreign stocks, including emerging market securities. This small-cap mutual fund has a ten year annualized return of 3.74%.

The fund manager is Christian A. Andreach and he has managed this small-cap mutual fund since 2002.

Virtus Small-Cap Sustainable Growth A (PSGAX) seeks capital appreciation over the long term. The fund invests in small cap companies while maintaining the risk profile of the S&P 500 which consists entirely of large cap companies. The small-cap mutual fund returned 25.37% over the last one year period.

As of September 2011, this small-cap mutual fund held 28 issues, with 5.49% of its total assets invested in BlackRock Liquidity TempFund Instl.

Wells Fargo Intrinsic Small Cap Value (SCOVX) invests the majority of its assets in equity securities of small-cap companies. These firms must have market capitalizations within the range of the Russell 2500 Index. This small-cap mutual fund has a three year annualized return of 12.45%.

The small-cap mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.48% compared to a category average of 1.36%.

Needham Small Cap Growth (NESGX) seeks capital growth with lowest possible tax implications. The majority of the fund’s assets is invested in domestic equity securities of companies with market capitalizations of less than $2 billion or is within the range of the Russell 2000 index, if greater. This small-cap mutual fund has a five year annualized return of 3.14%.

The fund manager is Chris J. Retzler and he has managed this small-cap mutual fund since 2008.

To view the Zacks Rank and past performance of all small-cap mutual funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.