The recent market pullback has deterred many investors from taking on more risk. In volatile times, many choose to ride out the storm with investments in stable large-cap names. But small-cap stocks have historically performed strongly in a post-recessionary environment. Furthermore, small caps have outperformed their large-cap peers by about 2 percent annually on a total return basis since 1926.

When Benjamin Shepherd profiled Artio US Smallcap (JSCAX) last September, he noted that this small-cap fund offered investors the opportunity for significant growth. The fund had emerged from the mire of the 2008 recession to post an impressive gain of 64.4 percent in 2009, landing it in the top 1 percent of its category. But the fund’s performance last year failed to top the charts; Artio US Smallcap returned 21.3 percent compared to a category average of 27 percent. Since recommendation, the fund has held its ground, returning 8.6 percent since ,despite steep market declines in August of this year.

Investing in small-caps may be a risky endeavor at times. But the potential rewards often justify the risk.

In the August 2011 issue of Louis Rukeyser’s Mutual Funds we mistakenly printed that Homestead Funds provides lobbying support for the National Rural Electric Cooperative Association (NRECA), a trade association for America’s non-profit, rural electric utilities. Homestead Funds was created as an open-end mutual fund company to give employees at those utilities access to inexpensive, sound money management. You do not have to be affiliated with NRECA to invest. We apologize for the error.