3 Top-Ranked Small-Cap Value Mutual Funds With Growth Potential

Small-cap value mutual funds provide excellent choices for investors looking for bargains, i.e., stocks at a discount with impressive growth potential. Value mutual funds comprise stocks trading at a discount to book value, with low price-to-earnings ratios and high dividend yields.

Value investing is a very popular strategy, and for good reason. After all, who doesn’t want to find stocks with a low Price/Earnings (P/E) ratio, solid outlooks and decent dividends? Additionally, small-cap funds are good choices for investors with a high-risk appetite, as companies with small market capitalizations are expected to have higher growth potential than large- and mid-cap companies. Small-cap funds generally invest in companies with a market cap of less than $2 billion. Also, small-cap funds are expected to provide diversification across different sectors and companies.

Below, we share with you three top-ranked small-cap value mutual funds, namely, FPA Queens Road Small Cap Value QRSVX, DFA US Targeted Value DFFVX and Pinnacle Value PVFIX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of Small Cap Value mutual funds.

FPA Queens Road Small Cap Value seeks to achieve its objective by mainly investing in equity securities, such as common, preferred and convertible stocks of small-cap U.S. companies. Normally, it invests the majority of its net assets (including investment borrowings) in small-cap equities.

FPA Queens Road Small Cap Value has a three-year annualized return of 15.2%. As of November 2025, QRSVX held 47 issues, with 4.5% of its assets invested in UGI Corp.

DFA US Targeted Value invests in a varied group of readily marketable securities of U.S. small and mid-cap companies that its advisors consider to be value stocks with high profitability.

DFA US Targeted Value has a three-year annualized return of 13.2%. DFFVX has an expense ratio of 0.29%.

Pinnacle Value targets small and micro-cap U.S. companies, investing in diverse equity securities it believes are undervalued relative to their earnings potential or asset value.

Pinnacle Value has a three-year annualized return of 13.2%. John E. Deysher has been one of the fund managers of PVFIX since April 2003.

To view the Zacks Rank and the past performance of all small-cap value mutual funds, investors can click here to see the complete list of small cap value mutual funds.

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>

Free Report: Profiting from the 2nd Wave of AI Explosion

The next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.

Investors who bought shares like Nvidia at the right time have had a shot at huge gains.

But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.

Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.

Access AI Boom 2.0 now, absolutely free >>

View All Zacks #1 Ranked Mutual Funds

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (QRSVX): Fund Analysis Report

Get Your Free (PVFIX): Fund Analysis Report

Get Your Free (DFFVX): Fund Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research