Small-cap blend funds are a type of equity mutual fund which holds in its portfolio a mix of value and growth stocks, where the market capitalization of the stocks are generally lower than $2 billion. Blend funds are also known as “hybrid funds.” Blend funds aim for value appreciation by capital gains. It owes its origin to a graphical representation of a fund's equity style box. In addition to diversification, blend funds are great picks for investors looking for a mix of growth and value investment. Meanwhile, small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds.
Below we will share with you 4 buy-rated small-cap blend mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (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 blend mutual funds, investors can click here to see the complete list of funds.
Fidelity Stock Selector Small Cap (FDSCX – MF report) invests a large chunk of its assets in common stocks of companies having market capitalizations within the universe of the Russell 2000 Index or the S&P SmallCap 600 Index. FDSCX seeks capital growth by investing its assets across a wide range of sectors. The Fidelity Stock Selector Small Cap fund has a three-year annualized return of 10.1%.
As of July 2015, FDSCX held 202 issues, with 1.40% of its total assets invested in Bank of the Ozarks Inc.
SSgA Enhanced Small Cap N (SESPX – MF report) seeks maximum return. SESPX invests a major share of its assets in equity securities of small-cap companies having market capitalizations similar to those included in the Russell 2000 Index. SESPX primarily focuses on acquiring common stocks of companies and may also invest in IPOs, fixed-income securities and money market funds. The SSgA Enhanced Small Cap N fund has a three-year annualized return of 12.3%.
SESPX has an expense ratio of 0.75% compared to a category average of 1.23%.
Lord Abbett Alpha Strategy A (ALFAX – MF report) is a “fund of funds” that generally invests in mutual funds of Lord, Abbett & Co. LLC. ALFAX invests in value and growth stocks of companies located all over the world. ALFAX invests in companies having micro, small and mid-cap capitalizations. The Lord Abbett Alpha Strategy A fund has a three-year annualized return of 12.1%.
As of June 2015, ALFAX held 7 issues, with 20.18% of its total assets invested in Lord Abbett Developing Growth I.
QS Batterymarch U.S. Small Capitalization Equity Portfolio Class A (LMBAX – MF report) seeks long-term capital appreciation. LMBAX invests the majority of its assets in equity securities of companies with relatively small market capitalizations domiciled in the United States, at the time of investment or other investments with similar economic characteristics. LMBAX may also invest in securities of foreign companies in the form of American Depositary Receipts. The QS Batterymarch U.S. Small Capitalization Equity Portfolio Class A fund has a three-year annualized return of 11.9%.
Stephen Lanzendorf is the fund manager and has managed LMBAX since 2006.
