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3 Mid-Cap Value Funds to Buy Amid Slower GDP Growth
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The Bureau of Economic Analysis reported that GDP grew at an annual rate of 1.3% in the first quarter, down from the 3.4% growth rate in the fourth quarter of 2023 and below the initial estimate of 1.6% given last month. This marks the slowest growth rate since 2022.
Data from the Commerce Department indicates a decline of 0.6% in corporate profits compared to the previous record high of 4.1% in the fourth quarter. The core personal consumption expenditures index, which is a measure of inflation preferred by the Federal Reserve, was also adjusted downward to 3.6% from 3.7%. These shifts in indicators suggest that the Federal Reserve may start cutting interest rates by September.
Given this situation, mid-cap value mutual funds emerge as an appealing investment option. Mid-cap companies, with market capitalization between $2 billion and $10 billion, offer a balanced blend of growth potential and stability. Value stocks known for their lower price-to-earnings ratios and higher dividend yields tend to perform well during economic slowdowns due to their resilience and strong financial positions. The possibility of interest rate cuts could lead to decreased borrowing expenses, which would boost profits and aid in business growth, especially benefiting mid-cap companies.
Thus, from an investment standpoint, we have selected three mid-cap value mutual funds, which are expected to hedge one's portfolio against any economic downturn and provide attractive returns. Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These mutual funds, by the way, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
T. Rowe Price Mid-Cap Value (TRMCX - Free Report) invests most of its assets in companies with market capitalization falling within the range of those included in either the S&P MidCap 400 Index or the Russell Midcap Value Index at the time of purchase.
Vincent Michael DeAugustino has been the lead manager of TRMCX since May 1, 2002. Most of the fund’s holdings were in companies like Western Digital Corp (3.2%), MKS Instruments, Inc. (2.3%) and Stanley Black & Decker, Inc. (2.3%) as of Dec 31, 2023.
TRMCX’s 3-year and 5-year annualized returns are 8.1% and 11.9%, respectively. Its net expense ratio is 0.80%. TRMCX has a Zacks Mutual Fund Rank #1.
Vanguard Selected Value Inv (VASVX - Free Report) fund invests most of its net assets in common stocks of mid-cap domestic companies, which, according to its advisors, are undervalued and often have above-average dividend yield. VASVX advisors consider undervalued stocks as those that are out of favor with investors and are trading at below-average prices in relation to measures such as earnings and book value.
Richard Lawrence Greenberg has been the lead manager of VASVX since Feb 25, 2005. Most of the fund's holdings were in companies like AerCap Holdings NV (3.5%), Fidelity National Financial, Inc. (1.7%) and TE Connectivity Ltd. (TEL) (1.7%) as of Jan 31, 2024.
VASVX's 3-year and 5-year returns are 7.1% and 11.5%, respectively. Its net expense ratio is 0.43%. VASVX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Value (FDVLX - Free Report) fund invests in common stocks of medium-sized companies that possess fixed assets or are undervalued with respect to factors such as assets, earnings or growth potential based on the research of Fidelity Management & Research Company LLC (FMR). FDVLX advisors preferably invest in medium-sized companies of domestic or foreign issues.
Matthew Friedman has been the lead manager of FDVLX since May 13, 2010. Most of the fund's holdings were in companies like Constellation Energy Corp (1.3%), Global Payments Inc. (1.2%) and PG&E Corp (TEL) (1.1%) as of Jan 31, 2024.
FDVLX's 3-year and 5-year returns are 6.7% and 12.4%, respectively. Its net expense ratio 0.87%. FDVLX has a Zacks Mutual Fund Rank #1.
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3 Mid-Cap Value Funds to Buy Amid Slower GDP Growth
The Bureau of Economic Analysis reported that GDP grew at an annual rate of 1.3% in the first quarter, down from the 3.4% growth rate in the fourth quarter of 2023 and below the initial estimate of 1.6% given last month. This marks the slowest growth rate since 2022.
Data from the Commerce Department indicates a decline of 0.6% in corporate profits compared to the previous record high of 4.1% in the fourth quarter. The core personal consumption expenditures index, which is a measure of inflation preferred by the Federal Reserve, was also adjusted downward to 3.6% from 3.7%. These shifts in indicators suggest that the Federal Reserve may start cutting interest rates by September.
Given this situation, mid-cap value mutual funds emerge as an appealing investment option. Mid-cap companies, with market capitalization between $2 billion and $10 billion, offer a balanced blend of growth potential and stability. Value stocks known for their lower price-to-earnings ratios and higher dividend yields tend to perform well during economic slowdowns due to their resilience and strong financial positions. The possibility of interest rate cuts could lead to decreased borrowing expenses, which would boost profits and aid in business growth, especially benefiting mid-cap companies.
Thus, from an investment standpoint, we have selected three mid-cap value mutual funds, which are expected to hedge one's portfolio against any economic downturn and provide attractive returns. Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These mutual funds, by the way, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
T. Rowe Price Mid-Cap Value (TRMCX - Free Report) invests most of its assets in companies with market capitalization falling within the range of those included in either the S&P MidCap 400 Index or the Russell Midcap Value Index at the time of purchase.
Vincent Michael DeAugustino has been the lead manager of TRMCX since May 1, 2002. Most of the fund’s holdings were in companies like Western Digital Corp (3.2%), MKS Instruments, Inc. (2.3%) and Stanley Black & Decker, Inc. (2.3%) as of Dec 31, 2023.
TRMCX’s 3-year and 5-year annualized returns are 8.1% and 11.9%, respectively. Its net expense ratio is 0.80%. TRMCX has a Zacks Mutual Fund Rank #1.
Vanguard Selected Value Inv (VASVX - Free Report) fund invests most of its net assets in common stocks of mid-cap domestic companies, which, according to its advisors, are undervalued and often have above-average dividend yield. VASVX advisors consider undervalued stocks as those that are out of favor with investors and are trading at below-average prices in relation to measures such as earnings and book value.
Richard Lawrence Greenberg has been the lead manager of VASVX since Feb 25, 2005. Most of the fund's holdings were in companies like AerCap Holdings NV (3.5%), Fidelity National Financial, Inc. (1.7%) and TE Connectivity Ltd. (TEL) (1.7%) as of Jan 31, 2024.
VASVX's 3-year and 5-year returns are 7.1% and 11.5%, respectively. Its net expense ratio is 0.43%. VASVX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Value (FDVLX - Free Report) fund invests in common stocks of medium-sized companies that possess fixed assets or are undervalued with respect to factors such as assets, earnings or growth potential based on the research of Fidelity Management & Research Company LLC (FMR). FDVLX advisors preferably invest in medium-sized companies of domestic or foreign issues.
Matthew Friedman has been the lead manager of FDVLX since May 13, 2010. Most of the fund's holdings were in companies like Constellation Energy Corp (1.3%), Global Payments Inc. (1.2%) and PG&E Corp (TEL) (1.1%) as of Jan 31, 2024.
FDVLX's 3-year and 5-year returns are 6.7% and 12.4%, respectively. Its net expense ratio 0.87%. FDVLX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>