Finding the Best Small-Cap Growth Funds: Three Top Performers to Watch

Small-cap growth funds represent an interesting investment avenue for those seeking higher returns and capital appreciation. These funds typically focus on companies with market capitalizations under $2 billion—organizations that, while smaller, possess significant growth potential. If you’re considering where to allocate funds for long-term growth, understanding the landscape of top-performing small-cap options becomes essential.

Why Small-Cap Growth Funds Matter

Investors drawn to growth over dividends often find small-cap growth funds appealing. The volatility associated with smaller companies can translate to substantial capital appreciation over time. Geographic diversification through limited international exposure also shields these funds from foreign exchange headwinds. For those comfortable with market fluctuations and seeking exposure across multiple sectors and emerging companies, these funds warrant serious consideration.

Comparing Three Strong Performers

When evaluating the best small-cap growth funds available, three standouts consistently demonstrate solid track records:

Putnam Small Cap Growth (PNSAX) has positioned itself as a competitive player in this space, having delivered 16.5% in returns over the past three years. The fund’s strategy centers on identifying U.S.-based small-cap companies with market capitalizations aligned with the Russell 2000 Growth Index at the time of investment. Fund advisors focus on businesses showing accelerated earnings growth relative to industry peers, a characteristic often preceding meaningful stock price appreciation. With an expense ratio of 1.17%, this fund balances performance with reasonable cost considerations.

Blackrock Advantage Small Cap Growth Fund (CSGEX) takes a different approach, concentrating its portfolio in domestic small-cap growth equity securities and related derivative instruments. The fund has generated three-year annualized returns of 13.5%, reflecting a more conservative positioning within the small-cap growth category. Raffaele Savi has been instrumental in managing the fund since March 2017, bringing sustained leadership continuity.

Goldman Sachs Small Cap Growth Insights Fund (GSAOX) rounds out the trio with impressive three-year performance of 17.3%. This fund maintains a broadly diversified portfolio spanning both domestic and foreign small-cap equities traded on U.S. exchanges, complemented by fixed-income securities functioning as cash equivalents. As of mid-2025, GSAOX held 398 positions, with Hims & Hers Health representing 1.2% of fund assets.

Making Your Selection

The choice between these best small-cap growth funds depends on individual risk tolerance and investment objectives. PNSAX appeals to those favoring focused earnings-growth strategies, CSGEX suits investors preferring established management and measured volatility, while GSAOX attracts those seeking maximum diversification across small-cap opportunities. All three have demonstrated resilience and consistent returns worthy of portfolio consideration.