The Top Small Cap Funds to Watch Out for in 2021
Small cap funds are an excellent way for investors to take advantage of the potential growth opportunities offered by smaller companies. Typically, small cap funds invest in companies with a market capitalization of less than $2 billion. These companies often have a high potential for growth but also have a higher level of risk associated with them. Despite the risks, small cap funds can provide an excellent return on investment for savvy investors who know where to look. In this article, we'll take a look at some of the top small cap funds to watch out for in 2021.
1. Vanguard Small-Cap Value Index Fund (VSIAX)
The Vanguard Small-Cap Value Index Fund is an excellent option for investors who are looking for exposure to small-cap value stocks. The fund invests in a broadly diversified portfolio of small-cap value stocks with an expense ratio of 0.15%. The portfolio is designed to track the performance of the CRSP US Small Cap Value Index. This fund has consistently outperformed its peers over the long term, and it could be an excellent option for investors who are looking for long-term growth.
2. T. Rowe Price Small-Cap Stock Fund (OTCFX)
The T. Rowe Price Small-Cap Stock Fund is an actively managed fund that invests primarily in small-cap stocks with a market capitalization of less than $5 billion. The fund has a long-term track record of outperformance and has been managed by the same team since its inception in 1988. The fund's expense ratio is 0.84%, which is slightly higher than some of its peers, but the returns have made it worth it.
3. iShares Russell 2000 Index Fund (IWM)
The iShares Russell 2000 Index Fund is an exchange-traded fund (ETF) that tracks the performance of the Russell 2000 Index, which consists of small-cap stocks. The fund has an expense ratio of 0.19%, making it one of the most cost-effective ways to invest in small-cap stocks. The fund has a long-term track record of outperformance and could be an excellent way for investors to gain exposure to small-cap stocks in a diversified way.
4. Fidelity Small Cap Discovery Fund (FSCRX)
The Fidelity Small Cap Discovery Fund is an actively managed fund that invests primarily in small-cap stocks with a market capitalization of less than $3 billion. The fund has a long-term track record of outperformance, and the expense ratio is 0.75%. The fund has a focus on growth companies and could be an excellent option for investors who are looking for long-term capital appreciation.
5. Invesco Russell 2000 Pure Growth ETF (PXSG)
The Invesco Russell 2000 Pure Growth ETF is an ETF that invests in small-cap growth stocks. The fund has an expense ratio of 0.39%, making it one of the cheapest growth ETFs available. The fund has a long-term track record of outperformance and could be an excellent option for investors who are looking for exposure to small-cap growth stocks.
Conclusion
Investing in small-cap funds can be an excellent way to take advantage of the potential growth opportunities offered by smaller companies. However, it's important to remember that small-cap funds are often riskier than their larger counterparts and may be more volatile. As always, it's essential to do your research and consult with a financial advisor before making any investment decisions. With that said, the funds listed above could be an excellent place to start for investors who are looking to gain exposure to small-cap stocks in 2021.