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Fund Spy

The Best Small-Company Funds

A dozen domestic small-cap funds earn Morningstar Fund Analyst Ratings of Gold.

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Investors gravitate to small companies for many reasons. Some want to participate in what has been called the "small-cap effect," or the theory that smaller companies have greater growth opportunities than larger companies and, as a result, have greater total return potential over time.

Others want a small dose of small companies in their portfolios to round out their exposure to the overall stock market. Still others like to tilt their portfolios toward small caps after a period of large-cap outperformance, such as we've seen during the trailing 12 months.

No matter the motivation, investors seeking small-company exposure can begin their search with our shortlist of the best small-cap funds, or those funds that earn a Morningstar Fund Analyst Rating of Gold.

Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.