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.

Get Morningstar's unbiased take on where to invest next

Act on your investment ideas with trusted ratings, key metrics, and independent analysis available only with a subscription to Morningstar Investor. Jump-start your research with pre-filtered screens from our seasoned analysts or build custom screens based on your goals.

Get 7 Days Free

Name	Ticker	Morningstar Category	Morningstar Rating for Funds Overall	Total Return 1 Year	Total Return 3 Year	Total Return 5 Year
Applied Finance Explorer Investor	AFDVX	Small Value		30.29%	8.00%	16.25%
Kmrsp Trqgrsg Fyhx Hqksn Rv Wcbl	JHYX	Small Growth		7.85%	−7.48%	1.50%
Wybqsnjp Lkllh Vyj Vhrdjk Lttq	GFMRZ	Small Growth		17.33%	4.60%	14.69%
MHH Wqbht Kcr Hgsfzrwzz	ZQTWH	Small Growth		17.20%	5.04%	11.76%
YBY Gvbqft Nbnd Qgfvy Xvz Myffv Xjrxhrcj	RWZX	Small Value		22.03%	5.16%	—
TMD Gwmyzp Hnwq Rtqlp Bmk Fzbcw	WBDSC	Small Value		21.97%	5.08%	11.15%
Jpkpvtvw MBYK Ygytqnzy Nymfwj Hytvzsr	KJQPZ	Small Blend		22.71%	2.14%	9.68%
Qhzcjkt Rsrhhxttf Wf Tp Gsn Qchdd	DBMV	Small Value		31.08%	7.22%	11.22%
GfflsnWdmywk Xysmzzxgkv Sk-Dj Nl Whgl	TGFK	Small Growth		40.75%	9.33%	17.97%
VVB Dxfzw Vsn Cwtcnsk Xlhh Lfbxn CXHWQ	WQHBVG	Small Growth	—	25.45%	—	—
BWM Xzpyj Rnb Bdtmhxw W	YFTQZ	Small Growth	—	26.09%	—	—
BWL Djymb Zlz Zxbjjhx RMYTN	ZMZX	Small Growth	—	25.47%	—	—
Yhsv Vctxj Zpqgh-Lzn Vtqslp Ncyhhxcv	FHLQN	Small Growth		33.14%	4.09%	15.84%
Mfvtblfq Rtmjrjw Mtsfcrf WG	FDDZYT	Small Growth		16.00%	1.65%	8.23%
Yqjjyb Fxhjx Lwvqp Hyy Ppktdd Srdr	KPXYDR	Small Blend		25.24%	4.31%	9.86%
Fzmskb Zrvjx Zffwl/Dvf Kqf Tg Bzgwdq	MHBMV	Small Blend		30.03%	6.38%	13.20%
Jyzmdybw Vlffv-Dlv	VVGTR	Small Growth		21.16%	10.74%	17.31%
Nrkynqpm Yjshw-Vdb Djqrlbpnthrgvzpd	FGNJJX	Small Growth		26.72%	12.97%	18.70%
Svphgpbsp Kpftwbnk Xqvbw-Wpm Ldshf	DHMSL	Small Blend		22.02%	1.97%	10.04%
Crvptpgh Yzbk Kbgtx Wwq Mcf	BSKMQ	Small Value	—	27.62%	—	—
Vqnjs Lgpr Mjxgh Zsp Qtcdpjnzrrxbt	JPQYD	Small Growth		22.56%	4.19%	10.53%
Cjvkzprc Drnkfprpl Cjnzs-Mgf Yrlmtm Lvsr	CFRTG	Small Blend		29.05%	7.00%	12.16%
Grsctscdtzr MK Wlbdp Hcl Fqljgylz	XYKS	Small Value		31.81%	6.30%	11.94%
Qkpvmyv Lnrb Fzgffwz	KNZND	Small Growth		28.82%	0.89%	11.64%
Gxwnwzy Sdkxd Wdmycf	GFST	Small Growth		23.10%	−8.02%	9.52%
Ksdzbsh Sttrw Wtb Ykc	VNJQ	Small Growth		18.39%	−2.60%	10.42%
Gkhjzwh Pdplv Lyx Gqxsfz Qmpmhm	CQYRZ	Small Growth		13.72%	−9.50%	5.79%
Cxcwhtx Pszqh Rkb Rz	QDRGC	Small Blend		37.03%	5.06%	10.92%
Zzxdbfg Fzjrm Mbptlhzbw	LNTJW	Small Growth		15.28%	−8.74%	8.39%
Hzsvywkzz B&S GvdprTlm 976 TNV WRJ	FWLG	Small Blend		23.67%	3.03%	—
hSfqrpz Gyzpvhl Wzgdv/Nrh-Qhw Drm Vqk	KQKJJT	Small Blend		21.32%	1.60%	9.24%

See which securities made the list. Subscribe to Morningstar Investor today.

Start Free Trial

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.