Small-cap funds are a good choice for investors seeking diversification across different sectors and companies. Investors with a high risk appetite should invest in these funds. Small-cap funds generally invest in companies having market cap lower than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Meanwhile, value stocks are stocks that tend to trade at a price that is lower than its fundamentals (i.e. earnings, book value, Debt-Equity). It is common for some investors to invest in value funds for the income or yield. However, not all value funds are comprised solely of companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is the dividend payments divided by the value of the mutual fund’s shares.

Below we will share with you 5 buy-rated small cap value mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small cap value funds, investors can click here to see the complete list of funds.

CornerCap Small Cap Value (CSCVX - MF report) seeks capital growth over the long run. CSCVX invests a lion’s share of its assets in small cap companies located in the US. CSCVX defines firms with market capitalizations below $3 billion as small cap. The CornerCap Small Cap Value fund returned 9.1% over the past one year.

As of June 2015, CSCVX held 220 issues with 0.71% of its assets invested in Walker & Dunlop Inc.

Putnam Small Cap Value A (PSLAX - MF report) invests a major portion of its assets in domestic companies having market capitalizations within the range of the Russell 2000 Value Index. PSLAX emphasizes in acquiring common stocks of companies that are believed to be undervalued. Factors including valuation, financial strength and dividends are considered before investing in a company. The Putnam Small Cap Value A fund returned 5.3% over the past one year.

Eric N. Harthun is the fund manager and has managed PSLAX since 2008.

JPMorgan Small Cap Value A (PSOAX - MF report) seeks long-term capital appreciation. PSOAX uses value-based strategy to invest in equity securities of small cap firms having market capitalizations similar to those listed in the Russell 2000 Value Index. PSOAX primarily invests in common stocks and REITs. The JPMorgan Small Cap Value A fund returned 2.1% over the past one year.

PSOAX has an expense ratio of 1.24% as compared to category average of 1.33%.

Dean Small Cap Value (DASCX - MF report) invests a large chunk of its assets in equity securities of small cap companies throughout the globe. DASCX may also invest in ETFs.The rest of DASCX’s assets may get invested in securities of companies other than small cap ones and other derivatives including put and call options and futures contracts. DASCX may also invest a small share of its assets in fixed income instruments. The Dean Small Cap Value fund returned 3.2% over the past one year.

Steven D. Roth is the fund manager and has managed DASCX since 2008.

Deutsche Small Cap Core S (SSLCX - MF report) seeks capital appreciation over the long-term. SSLCX invests majority of its assets in domestic companies with market capitalizations equal to those included in the Russell 2000 Index. Though SSLCX primarily focuses onacquiring common stocks of companies, it may invest a maximum of 20% of its assets in securities issued by the US government. SSLCX may also invest in other securities including preferred stocks and convertible securities. The Deutsche Small Cap Core S fund returned 12.8% over the past one year.

SSLCX has an expense ratio of 1.13% as compared to category average of 1.33%.