3 Small-Cap Value Funds Offering Compelling Growth Prospects

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, PGIM Quant Solutions Small-Cap Value TASVX, 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.

PGIM Quant Solutions Small-Cap Value mainly invests in U.S. small-cap stocks and related securities, focusing on companies within the Russell 2000 Index market-cap range, while also allowing a portion of assets in real estate investment trusts (REITs).

PGIM Quant Solutions Small-Cap Value has a three-year annualized return of 19.2%. As of January 2026, TASVX held 405 issues, with 1.1% of its assets invested in Enersys.

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 18%. 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 15.1%. 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.

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

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