3 Small-Cap Value Mutual Funds to Buy for Excellent Returns
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 with a market cap lower than $2 billion. The companies, though 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 consider value funds for income or yield. However, not all value funds consist solely of companies that primarily use their earnings to pay out dividends. Investors interested in choosing value funds for yield should check the mutual fund yield, which is dividend payments divided by the value of the mutual fund’s shares.
Below, we share with you three small-cap value mutual funds, viz., Invesco Small Cap Value (VSCAX), Heartland Value Investor (HRTVX) and James Small Cap Fund (JASCX). 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.
Invesco Small Cap Value fund seeks capital appreciation and invests in a diversified portfolio of equity securities of small-capitalization companies that its investment adviser believes are undervalued.
Invesco Small Cap Value has a three-year annualized return of 33.2%. As of the end of January 2026, VSCAX held 101 issues, with 3.9% of its net assets invested in Coherent Corp.
Heartland Value Investor fund seeks long-term capital appreciation. HRTVX invests primarily in stocks of small companies with a market capitalization of less than $1.5 billion, selected on a value basis.
Heartland Value Investor has a three-year annualized return of 23.8%. HRTVX has an expense ratio of 1.09%.
James Small Cap Fund invests primarily in equity securities of foreign and domestic companies that the adviser believes are undervalued, common stocks, preferred stocks and ETFs that invest primarily in equities.
James Small Cap Fund has three-year annualized returns of 22.9%. R. Brian Culpepper has been the fund manager of JASCX since October 1998.
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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