NEW YORK ( TheStreet) -- Small growth stocks have been leading the markets lately. During the past year, small growth funds returned 31.2%, outpacing the S&P 500 by 10 percentage points. At a time when the economy is sluggish, many investors may continue favoring the limited number of companies that can show rapid earnings increases.But before you write a check to a hot fund, keep in mind that small stocks are no longer cheap. The average small growth fund has a price-to-earnings ratio of 23.8, according to Morningstar. That is a big premium compared to the S&P 500, which has a multiple of 16. In addition, small growth funds can be volatile. If the market drops, small stocks could fall a long way.
3 Small Growth Funds With Steady Results
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