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4 Strong Buy Small-Cap Blend Mutual Funds

Those with a high risk appetite as well as an interest in growth and value investing, may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation by capital gains, small-cap funds are expected to have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to both growth and value stocks and owe their origin to a graphical representation of a fund’s equity style box. Meanwhile, funds investing the majority of their assets in securities of companies with market capitalization lower than $2 billion are generally considered small-cap mutual funds. Though funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn – thanks to less international exposure. Below we share with you four top-rated, small-cap blend mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Vanguard Strategic Small-Cap Equity Investor (MUTF: VSTCX ) invests the lion’s share of its assets in equity securities of small-cap companies with a domestic focus. VSTCX invests in companies that are belied to have impressive growth potential and favorable valuations. VSTCX is expected to maintain a risk level identical to the MSCI US Small Cap 1750 Index. The Vanguard Strategic Small-Cap Equity Investor fund has a three-year annualized return of 17.8%. VSTCX has an expense ratio of 0.38% as compared to the category average of 1.23%. Fidelity Advisor Small Cap A (MUTF: FSCDX ) seeks capital appreciation over the long run. FSCDX invests a large chunk of its assets in companies having market capitalization within the range of either the Russell 2000 Index or the S&P SmallCap 600 Index. FSCDX uses the “blend” strategy to invest in common stocks of companies. The Fidelity Advisor Small Cap A fund has a three-year annualized return of 16.4%. James M. Harmon is the fund manager of FSCDX since 2005. Principal SmallCap S&P 600 Index R3 (MUTF: PSSMX ) invests the majority of its assets in firms listed in the Standard & Poor’s SmallCap 600 Index. PSSMX also invests in index futures and equity ETFs in order to reduce tracking error by gaining exposure to the index. The Principal SmallCap S&P 600 Index R3 fund has a three-year annualized return of 15.7%. As of September 2015, PSSMX held 606 issues, with 3.05% of its assets invested in Russell 2000 Mini Dec15. QS Batterymarch US Capitalization Equity Portfolio FI (MUTF: LGSCX ) seeks long-term growth of capital. LGSCX invests the major portion of its assets in securities of small-cap companies. LGSCX primarily invests in domestic companies or those which operate predominantly in the U.S. LGSCX may also invest in non-US firms through ADRs. The QS Batterymarch US Small Cap Equity FI fund has a three-year annualized return of 16.4%. LGSCX has an expense ratio of 1.20% as compared to the category average of 1.23%. Original Post

Don’t Forget These International Small-Cap Dividend ETFs

Summary Roughly $2 of every $3 that flowed into U.S.-listed ETFs this year have gone into a strategic beta fund, and those inflows are being led by currency hedged funds. Favored developed markets such as Europe and Japan underscore the opportunities some investors have missed out on by ignoring international small-cap dividend ETFs. DFE is not a dedicated eurozone ETF, as British and Swedish stocks combine for over 40 percent of the ETF’s geographic weight. By Todd Shriber , ETF Professor Smart or strategic beta exchange-traded funds have enjoyed another banner of asset-gathering proficiency. By some estimates, roughly $2 of every $3 that flowed into U.S.-listed ETFs this year have gone into a strategic beta fund, and those inflows are being led by currency hedged funds. But, as is often the case with U.S.-focused ETFs, investors have displayed a large-cap bias when selecting developed market funds this year, glossing over some potent international small-cap dividend ETFs along the way. “But the vast majority of assets in international equity ETFs-and the vast majority of net inflows this year-has been concentrated primarily in developed world large-cap strategies. While equity returns for the MSCI Europe and MSCI Japan indexes have, thus far in 2015, exceeded those generated by the S&P 500 Index, the bigger bull market has actually occurred in the smaller-company segment of the developed world,” said WisdomTree (NASDAQ: WETF ) Chief Investment Strategist Luciano Siracusano in a note out Monday. Favorites Overshadow Other ETFs Favored developed markets such as Europe and Japan underscore the opportunities some investors have missed out on by ignoring international small-cap dividend ETFs. For example, the $976.7 million WisdomTree Europe SmallCap Dividend Fund (NYSEARCA: DFE ) , as of the end of October, had a year-to-date gain of 11.1 percent, according to WisdomTree data. That was more than 30 basis points better than MSCI Europe Small Cap Index and more than seven times better than the MSCI Europe Index, according to WisdomTree data . DFE is not a dedicated eurozone ETF, as British and Swedish stocks combine for over 40 percent of the ETF’s geographic weight. Though it is not a currency hedged ETF, the $354.2 million WisdomTree Japan SmallCap Dividend ETF (NYSEARCA: DFJ ) is another example of an international small-cap dividend ETF that has shined in 2015. As of the end of October, DFJ was up 15.3 percent this year, topping the MSCI Japan Index by 500 basis points and the MSCI Japan Small Cap Index by about 240 basis points. Not surprisingly, currency hedging has also worked with Japanese small-caps, such as the WisdomTree Japan Hedged SmallCap Equity ETF (NASDAQ: DXJS ) , has surged nearly 18 percent. DXJS has taken in $81.1 million of its $196.4 million in assets since the start of this year. Explaining The Divergence In Returns “What accounts for the divergence in returns? Part of it can be explained by sector concentrations, country and currency exposure. Another reason: Small-cap stocks are less tied to the global economy and often more sensitive to inflections in local economies. This can be partly explained by the historic tendency of small-company stocks to outperform large caps,” added Siracusano. A Final Fund Idea The WisdomTree Europe Hedged SmallCap Equity Fund (NYSEARCA: EUSC ) is another example of an international small-cap ETF worthy of more attention. Though it is up just two-thirds of a percent this year, EUSC has raked in almost $240 million in assets under management since coming to market in early March, making it one of this year’s most successful new ETFs. Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

How To Pick An Emerging Market Fund

By Tim Maverick If there’s one truism I’ve found during my years in the investing field – which date back to the 1980s – it’s the fact that everything is cyclical. What runs hot will inevitably turn cold in a few years, and vice versa. This reality is beautifully illustrated in this following periodic table of asset class returns. The table appeared in The Wall Street Journal courtesy of Budros, Ruhlin & Roe in Columbus, Ohio. The firm’s advisors use it to explain to clients why diversification is necessary. It also reinforces my contrarian bent. For instance, I’m not at all interested in the red-hot biotech and tech industries right now. Instead, I’m looking at a sector everyone is avoiding like the plague… emerging markets . I’ve been investing in emerging markets since the 1980s. Today, I’d like to share some tips on how to pick the best emerging market funds – and, just as importantly, how to avoid the losers. Tip #1: DON’T Use an Index Fund Index funds seriously narrow your investing universe. That’s true here in the United States, as well, but it’s really bad in emerging markets. Data from the Institute of International Finance brings home my point. Only about $7.5 trillion of the $24.7 trillion universe of emerging market stocks is contained in the various indices run by J.P. Morgan (NYSE: JPM ), MSCI (NYSE: MSCI ), and others. The rest is simply ignored. I don’t know about you, but I don’t want to pretend that roughly 70% of emerging market stocks don’t exist. As I’ve said before, you don’t shop in just one aisle at the grocery store. Don’t do it in the stock market, either. Tip #2: Don’t Invest in Closet Indexers So now we’ve eliminated index funds. Next up is looking at the top 10 positions in any fund you’re considering. If you see the names of companies like Samsung Electronics Co. Ltd. ( OTC:SSNLF ) , Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM ) , and China Mobile Ltd. (NYSE: CHL ) , move on. The fund manager is a closet indexer. They’re only interested in matching the index by which they’re judged, rather than actually making money for the fund’s shareholders. Tip #3: Avoid Funds That Over-Invest in Two Sectors Finally, it’s important to look at the sector breakdown of a fund. In far too many cases, these funds are over-invested in just two sectors. If you see 50% or more invested into financials and technology, skip over this fund. This fund manager doesn’t understand emerging markets and may be confused into thinking that they’re investing in the U.S. market. Indeed, these two sectors are loved by U.S. fund managers, and that fascination is one reason I believe most emerging market funds have performed so badly. What to Look For Now that we know what to avoid, let’s figure out what we should be looking for in an emerging market fund. I’m a great believer that people are people, no matter where they live. And all people aspire to better their lives and those of their children. For me, that means investing in funds that emphasize the growing consumer class in developing economies. Look at China, for instance. It’s moving away from an industrial economy toward a consumer economy. Just as we no longer consider U.S. Steel Corp. (NYSE: X ) a bellwether for the U.S. economy, we probably shouldn’t count on industrials to perform that role in China much longer, either. And that means you don’t want to own the usual Chinese names. Instead, you want to own something like the South Korean cosmetics company AmorePacific Corp. ( OTC:AMPCF ) . Its sales and revenues are soaring thanks to Chinese demand, which is boosting its stock. Another option is a frontier market stock like Safaricom Ltd. ( OTC:SCOM ) , Kenya’s dominant telecom firm. Kenyans have the same mobile phone addiction as everyone else, and the safety valve is that it’s 40% owned by telecom giant Vodafone Group Plc (NASDAQ: VOD ) . In closing, stick with funds that emphasize the growth of consumerism in places like China. Companies like Apple Inc. (NASDAQ: AAPL ) are benefiting, and so will the myriad number of home-grown consumer companies in the emerging world. Link to the original post on Wall Street Daily