We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

How do I Choose the Best Small-Cap Mutual Funds?

Gerelyn Terzo
By
Updated: May 17, 2024
Views: 4,623
Share

For the individual investor, mutual funds are often deemed the most affordable way to invest and receive the type of diversification and professional money management available. To choose the best small-cap mutual funds, you will have to do some research online and might need to contact potential investment firms. Small-cap stocks represent companies that have some of the lowest market capitalization, which represents the value of stocks, so they can be risky investments. That is why investing in small-cap mutual funds is a smart way to invest in this particular class of equities.

Choosing the best small-cap mutual funds begins with research. An enormous amount of wealth is managed by the mutual fund industry, so it is important to find the firm and individual investments that are most likely to help you reach your financial goals. An Internet search on a major search engine for a small-cap mutual fund is one way to begin.

After you have a list in place, you need to visit each fund's website and research the features that each one provides in addition to examining the fee structures of each one. A mutual fund will likely be required to file a prospectus with the local governing body, which is another source for your research. These are generally provided to investors, but you can request one from the mutual fund firm prior to investing. On the prospectus, you can learn about the mutual fund manager’s investment style and the fund's historical returns, which can provide a sense of what to expect when investing in this fund. Small-cap mutual funds can be more risky then some other types of investments, so you should focus on the level of risk inherent in this mutual fund investment, which should also be characterized in the prospectus.

Small-cap mutual funds are comprised of individual small-cap stocks. There can be any number of stocks in the fund, and the professional money manager can swap them out at will, in most cases. These funds have a smaller amount of money on hand than some larger corporations, but they also present the potential for growth, which can lead to generous profits. You can refer to a stock broker or just do some online research to generate a list of top-performing small-cap mutual funds. These are the funds that historically have paid the most generous returns to investors — but bear in mind that history does not always repeat itself.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Gerelyn Terzo
By Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in Mass Communication/Media Studies, she crafts compelling content for multiple publications, showcasing her deep understanding of various industries and her ability to effectively communicate complex topics to target audiences.

Editors' Picks

Discussion Comments
Gerelyn Terzo
Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in...
Learn more
Share
https://www.wisegeek.net/how-do-i-choose-the-best-small-cap-mutual-funds.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.