While bigger funds may get the headlines, small-value funds have their own appeal. As Morningstar fund reporter Gabe Alpert explains, “The long-term outperformance of such stocks has been empirically demonstrated since at least the 1990s.”
What Are Small-Value Funds?
Small-value portfolios invest in small US companies with valuations and growth rates below those of other small-cap peers. Stocks in the bottom 10% of the capitalization of the US equity market are defined as small caps. Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow).
The 13 Best Small-Value Funds and ETFs to Buy in 2026
To find the best small-value funds and ETFs to buy, we screened for the lowest-cost primary share classes earning a Morningstar Medalist Rating of Silver or Gold with 100% analyst coverage. All the funds and ETFs on the list fall into the small-value Morningstar Category and have at least $100 million in assets. All data is as of Jan. 14.
- AMG River Road Small Cap Value Fund ARZMX
- Avantis US Small Cap Equity ETF AVSC
- Boston Partners Small Cap Value Fund II BPSIX
- Diamond Hill Small Cap Fund DHSYX
- Diamond Hill Small-Mid Cap Fund DHMYX
- FPA Queens Road Small Cap Value Fund QRSIX
- First Eagle Small Cap Opportunity Fund FESRX
- Franklin Small Cap Value Fund FRCSX
- Invesco Small Cap Value Fund SMVSX
- LSV Small Cap Value Fund LSVQX
- Victory Sycamore Small Company Opportunity Fund VSORX
- VictoryShares US Small Mid Cap Value Momentum ETF USVM
- WisdomTree US SmallCap Dividend Fund DES
Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.
Morningstar expects the highly rated small-value funds on this list to outperform their peers over a full market cycle. But even though all the funds on our list fall into the same category, they may practice different strategies and therefore behave differently from each other. Investors need to do some homework to understand exactly what a particular fund invests in before buying.
How to Find More of the Best Funds and ETFs to Buy for the Long Term
Given their high Medalist Ratings, we expect the top-rated funds on our list to outperform over a full market cycle. That said, investors may want to expand their search beyond this list, using parameters that matter to them. Here are more ways to find more ETFs and mutual funds:
- Use the Morningstar Investor screener to create your own list of funds to investigate further.
- Explore Morningstar Medalist funds on our Best Investments page.
- Read our latest fund insights and analysis on Morningstar.com.
This article was generated with the help of automation and reviewed by Morningstar editors.
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The author or authors do not own shares in any securities mentioned in this article.
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