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Small-cap funds are good choices for investors seeking diversification across different sectors and companies. Investors with a high-risk appetite should pick these funds. Small-cap funds generally invest in companies having a market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently.
Meanwhile, value stocks tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity). It is common for some investors to invest in value funds for income or yield. However, not all value funds comprise solely companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is dividend payments divided by the value of the mutual fund’s shares.
Below, we share with you three small-cap value mutual funds, namely, Bridgeway Omni Small-Cap Value Fund BOSVX, Hotchkis & Wiley Small Cap Diversified Value Fund HWVAX and SouthernSun Small Cap SSSFX. 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 funds.
Bridgeway Omni Small-Cap Value Fund invests most of its assets, along with borrowings, if any, in a broad and diverse group of small-capstocks that are listed on the New York Stock Exchange, the NYSE American and NASDAQ at the time of purchase. BOSVX advisors generally invest in value stocks.
Bridgeway Omni Small-Cap Value Fund has a three-year annualized return of 23.7%. As of the end of September 2022, BOSVX held 630 issues, with 1.01% of its assets invested in PBF Energy Incorporated.
Hotchkis & Wiley Small Cap Diversified Value Fund invests most of its assets, along with borrowings, if any, in equity securities of domestic and foreign small-capitalization companies. HWVAX advisors generally invest in companies that are undervalued.
Hotchkis & Wiley Small Cap Diversified Value Fund has a three-year annualized return of 19.0%. HWVAX has an expense ratio of 1.05% compared with the category average of 1.16%.
SouthernSun Small Cap invests most of its assets, along with borrowings, if any, in small-capitalization securities at the time of purchase. SSSFX advisors generally invest in 20-40 companies that they believe are dominant and attractively valued with financial flexibility and uniquely fitted management teams.
SouthernSun Small Cap has a three-year annualized return of 22.0%. Michael W. Cook has been one of the fund managers of SSSFX since October 2003.
To view the Zacks Rank and the past performance of all small-cap value mutual funds, investors can click here to see the complete list of small-cap value mutual funds.
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