Small-cap growth mutual funds seek to provide a greater growth potential than the large- and mid-cap ones in an improving domestic economy. This is because small-cap stocks are closely tied to the domestic economy and have less international exposure, making them safer bets than their large- and mid-cap counterparts amid sluggish global growth.

Companies with market capitalization below $2 billion and an impressive growth prospect generally constitute the portfolio of these mutual funds. Though small-cap stocks are believed to provide higher returns, they are also considered more volatile than the large- and mid-cap companies. These mutual funds provide excellent choices for investors preferring long-term capital appreciation over dividend payouts while seeking to protect their investments from global growth concerns.

Below we share with you three top-rated small-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth funds .

Columbia Small Cap Growth I Z (CMSCX – MF report) invests the major portion of its assets in equity securities of companies having market capitalization within the universe of the S&P SmallCap 600 Index. CMSCX focuses on acquiring common stocks of companies that are believed to have an impressive growth potential over the long run. The fund may also invest in companies with short- and medium-term above-average growth potential. The Columbia Small Cap Growth I Z fund has a three-year annualized return of 4.8%.

As of January 2016, CMSCX held 127 issues with 2.87% of its assets invested in Euronet Worldwide Inc. (EEFT)

PNC Multi Factor Small Cap Growth A (PLWAX – MF report) seeks growth of capital over the long run. PLWAX invests a large portion of its assets in securities of small-cap companies. The fund generally invests in common stocks and American Depository Receipts (ADRs). Foreign securities may also be considered as potential investments. The PNC Multi Factor Small Cap Growth A fund has a three-year annualized return of 10.3%.