Finding the Best Small Cap Mutual Funds: Three Top Performers Worth Your Attention

When building a diversified portfolio, investors often overlook the opportunities within small cap mutual funds. These investment vehicles focus on companies with market capitalizations under $2 billion, offering substantial growth potential for those willing to accept moderate market volatility. If you’re seeking the best small cap mutual funds to enhance your long-term wealth-building strategy, understanding what separates top performers from average options is essential.

Why Invest in Small Cap Growth Funds?

Small cap growth mutual funds present a compelling proposition for investors prioritizing capital appreciation over income generation. Unlike large-cap counterparts, these funds invest in smaller firms that have room to expand significantly. The lower international exposure of small cap portfolios shields investors from currency fluctuations that can impact globally diversified funds. However, investors should recognize that smaller companies experience greater price swings than their larger peers, making these funds suitable primarily for risk-tolerant individuals with a multi-year investment horizon.

Growth-focused funds concentrate on companies expected to appreciate substantially over time, rather than those paying regular dividends. This approach maximizes compounding potential while providing exposure across multiple sectors and company types. For portfolio managers, this diversified small-cap approach reduces concentration risk while capturing upside from emerging market leaders.

Three Elite Small Cap Performers: Side-by-Side Analysis

Recent rankings highlight three funds that have earned top-tier recognition for their consistent outperformance. These selections demonstrate why choosing the best small cap mutual funds requires examining both performance metrics and strategic approach.

Invesco Discovery Fund (OPOCX): This fund pursues aggressive growth by investing primarily in small-capitalization companies that managers identify as having favorable expansion prospects. Portfolio holdings align with companies similar in size to Russell 2000 Growth Index constituents at the time of purchase. Over the past three years, OPOCX delivered 15.9% in annualized returns—among the strongest in its category. As of late August 2025, the fund maintained 101 individual positions, with StepStone Group representing 2.2% of assets.

Congress Small Cap Growth Fund (CSMVX): Taking a balanced approach, this fund seeks long-term capital expansion through equity investments across all economic sectors. The fund defines small-cap positioning using Russell 2000 Growth Index benchmarking, ensuring consistent size parameters. Congress achieved three-year annualized performance of 14.4%, supported by a reasonable 1.25% expense ratio that keeps costs manageable for investors.

Northern Small Cap Core Fund (NSGRX): Emphasizing companies that reinvest earnings for continued expansion, this fund targets firms paying minimal or no dividends. Its holdings match the broader Russell 2000 Index sizing methodology, capturing the full spectrum of small-cap opportunities. The fund delivered 10.8% returns over three years. Leadership changes in July 2024 brought portfolio manager Sridhar Kancharla to the team, bringing fresh perspective to fund strategy.

Comparing Your Small Cap Options

When evaluating these choices, performance diverges based on management philosophy and sector emphasis. OPOCX leads in pure growth potential with the highest three-year returns, making it suitable for aggressive investors. CSMVX balances growth ambitions with cost-efficiency through its moderate expense ratio. NSGRX offers a more conservative small-cap approach for investors prioritizing core holdings over speculation.

The distinction matters: each fund’s Zacks ranking reflects confidence in outperformance, yet their individual characteristics serve different investor profiles. Those seeking maximum capital appreciation might favor OPOCX, while cost-conscious investors may prefer CSMVX’s 1.25% expense structure.

Making Your Small Cap Decision

Selecting the best small cap mutual funds requires matching fund characteristics with your risk tolerance and investment timeline. Small-cap growth investing demands patience through inevitable market downturns, rewarding those who maintain conviction in smaller companies’ long-term potential. The three funds highlighted here represent genuine alternatives for building small-cap exposure, each with demonstrated track records and clear investment philosophies that distinguish them within the competitive mutual fund landscape.