The best small cap funds

In times of economic recovery small cap funds tend to outperform larger asset classes. Most investors want the best returns in their portfolio. Stock picking in small cap funds is more critical to getting handsome returns than large cap funds. In the early stages of an economic recovery and even well into the recovery small cap stocks outperform the total market.

I’m a big fan of no load funds. While there are some very good load funds out there you are going to have to get some very good management to overcome the load fee.

In the small cap arena good managers produce great results.

Royce Pennsylvania Mutual Fund, Symbol PENNX:

This is one of the oldest no load funds in the investment world. Since it’s inception in 1972 this fund has produced great returns year after year. This fund is run by Charles Royce. Over the last 35 years ending March 31, 2010 this fund is up 15.45% per year! Year over year ending March 31, 2010 this fund was nearly 65 percent. Over the last ten years this fund is up 10.13 percent per year while the Russell 2000 index is only up 3.68 percent. This fund is absolutely incredible.

Royce Low-Priced Stock Fund Symbol RYLPX:

This is another great offering from Royce! This fund is run by Whitney George. This fund was up nearly 74 percent year over year ending March 31, 2010. Over the last ten years this fund is up 10.45 percent per year while the Russell 2000 index is only up 3.68 percent This fund is available through Fidelity as a no transaction fee fund. It is available at other brokerage houses and brokerage firms.

For closed end fund investors Royce Value Trust symbol RVT is hard to beat.

When it comes to small cap investing the people at Royce have it right. Nearly every fund in their lineup has beaten the market this year the three, five, ten, and even the thirty year periods.

There are other funds that do well besides Royce!

Buffalo Small Cap Fund Symbol BUFSX.

This fund while it from time to time under performs the market for short periods over the long hall performance has been stellar! over the year ending March 31, 2010 the fund is up about 66 percent. Over the last 10 years is up 8.75 percent. This fund has only a $250 minimum purchase if held in an IRA. On May 27, 2009 this fund closed to new investors.

Intrepid Small Cap Fund Symbol ICMAX

This fund has only been around since October 2005 but over the last three years this fund is up almost 15% per year. During that same time frame the Russell 2000 was down almost 5%. This fund has a $2500 minimum for both IRA and non IRA investments.

Another fund promoted to the list of small cap mutual funds is the The Wasatch Small Cap Growth symbol WAAEX).This fund was up over 31 percent in 2010 and has been up almost 8 percent per year over the last 10 years.

An honorable mention goes out to the Perkins Small Cap Value Symbol JSCVX, up 10.71 percent per year over the last ten years as of March 31, 2010. The fund was up 63.8 percent year over year March 31, 2010.

The Gabelli Westwood Mighty Mites Fund Symbol WEMMX, up 8.67 percent per year over the last ten years ending March 31, 2010. This is a micro cap fund which invests in companies with a market cap of $300 million or less.

Having the best funds in the small cap arena can have a huge positive impact on your portfolio.

While having the best small cap funds will go a long way towards meeting your financial goals as investor more diversification is highly recommended. Develop your own asset allocation and invest in the best funds in those asset classes. Once the investor has their asset allocation select the best mid cap, large cap, global, bond, and even concentrated portfolio funds for their portfolio.

Regardless if you are investing in your IRA, 401K, 403B or taxable account invest your money wisely. How you invest is equally as important as how much you invest.