3 Small-Cap Value Mutual Funds to Build a Solid Portfolio

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By: Aquib Nawab


We're seeing positive inflation trends and AI-driven growth. Investors are profiting, and confidence is up. The Dow, S&P 500, and Nasdaq have all posted impressive gains of 12.4%, 22.9%, and 41.0% this year, respectively.


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Inflation is higher than the Fed's 2% goal. In November, prices went up by 3.1% compared to last year, with a small 0.1% rise from October. The reason for this increase is mostly because rent costs are going up.

Inflation Trends

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Job Market and Retail Sales

In November, more jobs were created with 199,000 added. Unemployment dropped to 3.7% from 3.9% in October. Retail sales in the US went up by 0.3% in November, good news for the holidays.

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Small-cap funds invest in companies under $2 billion market cap, offering growth. They focus on technology, finance, retail trade, energy, and industrial cyclicals, diversifying for long-term growth.

Small-Cap Funds Overview

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Mutual funds diversify cost-effectively versus buying stocks. No commissions and lower transaction costs make for a balanced, diversified portfolio.

Mutual Funds vs. Stocks

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Fund Selection Criteria

Our featured funds excel with strong 3-year and 5-year returns, hold top Mutual Fund Ranks A (Strong Buy) or B (Buy), need just a $5,000 initial investment, and have low expenses compared to the 1.16% category average.

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Focuses on undervalued small-caps. Managed by Jonathan Mueller, top holdings include Pinnacle Financial (2.8%), Northern Oil & Gas (2.7%) as of Jul 31, 2023. It boasts strong 3-year (20.4%) and 5-year (14.8%) returns, a Mutual Fund Rank A, and a low 0.84% expense ratio.

1. Invesco Small Cap Value (VSMIX)

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Focuses on diverse small-cap value stocks. Led by John N.R. Montgomery, top holdings include Chico’s Fas (1.5%), Hostess Brands (1.4%) as of Sep 30, 2023. It delivers strong 3-year (19.8%) and 5-year (12.3%) returns, ranks B in Mutual Funds, and sports a 0.86% annual expense ratio.

2. Bridgeway Small-Cap Value (BRSVX)

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Invests in US small-cap equity securities. Under Christopher J. Brightman's management, top holdings include Dillards (3.9%), Abercrombie & Fitch (3.1%) as of Jun 30, 2023. PMJAX boasts strong 3-year (16.1%) and 5-year (10.1%) returns, ranks A among Mutual Funds, and maintains a 0.90% annual expense ratio.

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