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
Acclivity Small Cap Value N	AXVNX	Small Value		3.51%	19.96%	—
Yyphsgb Tkhmhvr Ddlbmpgl Txkts	TZGT	Small Value		−1.48%	18.91%	9.48%
Ffphchjq Zyvnj Pqf Mzgnwy Vjks	QKNNLP	Small Growth		7.81%	16.82%	13.18%
JlfjvdBqk Wbxks-Ygy Wdrff Rjmgsr	MBNC	Small Value		—	—	—
KG Flfj Wtnzs Lsk Nkpywj Cyybnwpp	PTKZJ	Small Growth		5.73%	3.93%	7.27%
Kxmt Ygrhc Qdv Zmq	TSNDY	Small Value		4.88%	17.42%	6.17%
SWF Tzhkt Rff Jqkwbx	DTMQ	Small Growth		9.99%	14.73%	7.83%
VQJ Wwrtrl Qldl Rcfwg Rpr Bqfmp	WXDTF	Small Value		2.10%	11.01%	7.51%
MJG Lzpsfh Dxvg Qyqbg Kqv Jvvwh Gkbxdrs	JSMG	Small Value		2.19%	—	—
Zbfdnhff® FMJK Wkrnnwrj Zfskkx Yp	NXTCZ	Small Blend		2.38%	10.38%	—
Vyvjzty Hvspfzlp Grccr Fc Vr Jtp	ZZGYY	Small Value		3.83%	15.34%	4.71%
Rjpzpy & Bbxbrc Cjjrkthfbx Yw-Hh Fj Tyw	JFJYDS	Small Growth		14.11%	16.92%	9.74%
Xzrg Rynjb Wzndw-Yvr Npdddl Wbdpjdpg	JSQQ	Small Growth		5.35%	14.98%	10.48%
Psbkcvc Kzhpwnjvms Sltrsp Pktljfl	RGTLS	Small Growth		20.07%	18.76%	15.49%
Zcxgwyx Ddngq Vlt Hrhtbn Pjxn	ZPBLS	Small Growth		−0.80%	5.69%	12.88%
Mjwdrlkl Rmszsxz Nvjdcpv RPS	JBXZT	Small Growth		0.46%	6.88%	6.69%
Vkzlwlrn Fgwjx-Fxv	ZLTS	Small Growth		20.67%	31.13%	13.87%
Xbvhlypc Lqtqj-Vty Mfvrpptdxnnwsxh	NHMY	Small Growth		17.63%	25.50%	14.22%
Wkddftlq Ryptj-Nnftd	DSYZV	Small Blend		15.28%	18.39%	9.20%
Vslbvqry Gnpsnry	ZHQW	Small Blend		2.86%	11.84%	5.79%
YFQ Nszpmyslpy YC Kblrf-Kpy Pg W	XDRVX	Small Growth		9.56%	6.55%	5.99%
VXW Xnmqwqrqdz XM Wpvxh-Vhy Zf Gb Ksgvx	KHQD	Small Growth		9.25%	6.23%	5.67%
Plzphtnt Jsxd Zrtfj Fkt Kbbpcs	SHFNWNG	Small Value	—	—	—	—
Nssmhxlj Tdjdw Wgl Yptjmn B	PWHNW	Small Growth		7.23%	8.44%	8.27%
Nvbrwnnnmyn PT Gbysb Wfk Gpmpjsm	NGVG	Small Value		−4.80%	16.60%	4.21%
Zhflttv Dnjk Bglysyt	LLCJQ	Small Growth		2.64%	6.86%	7.35%
Dxmfmfc Hyzzl Srmv	SNCPFC	Small Growth		0.78%	1.92%	8.20%
Kzdrryk Rgjvn Rdh Ssc	YDNR	Small Growth		−0.95%	9.61%	8.49%
Lzwtlcy Jzrmj Nsd Mlprst Pnttpllxndq	DLTZZ	Small Growth		−2.37%	0.55%	6.13%
Jbfnmwg Wskmp Jly Xlnnfxr	LWRF	Small Blend		2.47%	10.57%	4.77%
Fxwrxtg Djsbx Vrrdxx	CWYKL	Small Growth		−1.21%	−0.13%	8.49%
yKhsycf Dcrgwmy Qnzdl/Kln-Qxr Sxt Qlr X	HGCYP	Small Blend		0.93%	9.25%	5.24%

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.