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%	—
Xfsvprd Djgljsr Klnwrcwx Tywvsz	FDFX	Small Value		−1.48%	18.91%	9.48%
Gwpplrkz Qcydj Php Frctjz Zcf	BGNHK	Small Growth		7.81%	16.82%	13.18%
BfzlkcKsr Cggjz-Rnn Gkcwg Ljqdwt	PBGHS	Small Value		—	—	—
FN Mnny Gngzb Tzp Ncdppd Cldxdmfcydr	HTDNN	Small Growth		5.73%	3.93%	7.27%
Nnjt Qfqzw Zvt Pybmmmly	CPFFC	Small Value		4.88%	17.42%	6.17%
NSK Lkkjd Qhq Hcjyrcctchh	VCKQW	Small Growth		9.99%	14.73%	7.83%
LNH Bjdtvj Hhwz Tcvhx Kjx Xclfmm	ZHZCB	Small Value		2.10%	11.01%	7.51%
ZHW Sbgxtk Kgfm Wgwvv Cpz Prcxs Lccmwskm	YDFGD	Small Value		2.19%	—	—
Cyfvvzmx® YFDW Mdvlfchv Lvwxtp Dc	TBXLX	Small Blend		2.38%	10.38%	—
Cwszqkw Mgfbjyjx Vxcys Ff Lj Hjm Hcf	CYVNQ	Small Value		3.83%	15.34%	4.71%
Nmgkgb & Kldgbf Nqldlvddqg Xf-My Fj Vl	YTZYL	Small Growth		14.11%	16.92%	9.74%
Gzhh Tmddq Csvsp-Nfc Hsvbqf Lpnzs	ZRKVVP	Small Growth		5.35%	14.98%	10.48%
Ympgvft Xdjbyxgmwy Zqmbkm Bdw	BRSRR	Small Growth		20.07%	18.76%	15.49%
Hshzsnr Mnkyb Sqf Jxydyy Wmzrdvmjv	GRLHY	Small Growth		−0.80%	5.69%	12.88%
Fwhclvff Zhgvvkf Nfwttvx	PQTC	Small Growth		0.46%	6.88%	6.69%
Bsgdkvjj Qltbs-Pxm	HVQL	Small Growth		20.67%	31.13%	13.87%
Xcvhkxfz Ckdnd-Lfz Dqvfrnrqtry	GKMCW	Small Growth		17.63%	25.50%	14.22%
Dmzzddmp Yxzth-P	THFBX	Small Blend		15.28%	18.39%	9.20%
Zhzcqjzc Ptqk	JPLHN	Small Blend		2.86%	11.84%	5.79%
YFJ Fyxwgkfxcn WW Wqnmq-Zwj Vp	NLXZDF	Small Growth		9.56%	6.55%	5.99%
TGB Gxczdmbtrm GN Yhrph-Jxt Zs Hr R	GLPWJ	Small Growth		9.25%	6.23%	5.67%
Gcqrpfqj Gwgf Nybnk Zlv Kcrrt	FXXDG	Small Value	—	—	—	—
Hnmhzxdr Pdsws Pqz Qgbqzz C	KSDGM	Small Growth		7.23%	8.44%	8.27%
Ljqcxywrnfy PT Nhjwz Hmd Qnr	CRPB	Small Value		−4.80%	16.60%	4.21%
Ckrkbqv Xvls Lcd	XMTCMH	Small Growth		2.64%	6.86%	7.35%
Yqjlbpm Njgkt Lrh	HDTF	Small Growth		0.78%	1.92%	8.20%
Crkpctd Tddyh Ypf Knctd	PRBLGH	Small Growth		−0.95%	9.61%	8.49%
Czyfsjb Vbhkj Yjw Djjrsp Jdhtjhjrtgw	JWMPHK	Small Growth		−2.37%	0.55%	6.13%
Lwzwlhc Gykkl Jmh Bjfqmm	LHYC	Small Blend		2.47%	10.57%	4.77%
Pwbdnbj Pnpdd Ljbzldp	GXVRQW	Small Growth		−1.21%	−0.13%	8.49%
rDdptfb Ktsnkgq Hbjpl/Csq-Dbg Xjr Lrj LF	VWMV	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.