All things being equal, most investors are looking for two primary objectives in their portfolios: capital growth and capital preservation. These goals can be achieved with the proper balance of high and low risk investments within your portfolio, and necessitate careful research and monitoring of a portfolio’s individual securities.
The amount of work involved in building a successful portfolio may be unrealistic for many investors who may not have the ability, or the desire to research individual stocks and assets to maximize your investments. Many such investors have turned to mutual funds for their professional management, and diversification.
If you are looking for growth in your portfolio, you may have heard that small-cap stocks can be excellent avenues for capital growth, but investing in individual small-cap stocks can be extremely risky. As these are growing, small corporations, these types of stocks can experience considerable volatility and significant risk of loss.
You can mitigate some of this risk by investing in the best small cap mutual funds, as these can offer you the growth aspect you need in your portfolio, while lessening the risk that can come from investing in an individual company or sector.
How To Find The Best Small Cap Mutual Funds For Your Portfolio
While the majority of mutual funds invest solely in large-cap companies, there are some funds that focus on small-cap companies which often have a market capitalization of between $250 million to $2 billion.
When you find the best small cap mutual fund for your portfolio, you are giving yourself the opportunity to profit from the growth this sector can offer. Keep in mind that there is considerable risk to investing in small-cap companies, and you should always consult with your financial adviser prior to investing any capital.
The industry’s top financial professionals are on hand at online brokerage ETrade to assist you in finding the small-cap mutual fund that is right for you. If you are a more independent investor, the mutual fund screener offers you the opportunity to screen potential investments based on a variety of criteria including ratings and market capitalization to find the fund that works best for you.
You should always research each potential investment carefully including reviewing a fund’s prospectus for historical performance, fund manager’s tenure, and a complete list of the fund’s holdings. You should also consider any fees and expenses associated with investing in the fund as these can greatly affect your realized gains.
Invest In The Best Small Cap Mutual Funds For Maximum Gains
Once you have complied a list of the best small cap mutual funds, and you have done the required research you may be ready to purchase shares of the mutual fund. It is important to thoroughly understand how they fit into and enhance your investment objective prior to committing any capital.
Even if you are an experienced investor, you may want think twice before committing a large portion of your investment capital to small-cap stocks, even if you are investing through a small-cap mutual fund. These small-cap securities often go unnoticed by analysts, and can be undervalued and ripe for investment.
It does, however, take a savvy, experienced investor and a considerable time commitment to spot these opportunities.
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