According to the Consumer Price Index (CPI) data published by the Bureau of Labor Statistics, inflation for the month of June fell 0.1% mostly due to cheap gasoline prices and moderating rents. Personal consumption expenditure price index (PCE), the Federal Reserve’s most-preferred gauge for inflation, also came up with a favorable reading for the month of June. The PCE increased 0.1% monthly, in line with the street’s expectations. The year-over-year gain is 2.5% compared to the 2.6% rise in May. The above data suggests that inflation in the second quarter resumed its downward trend.

Personal income rose 0.2%, below the consensus estimate of 0.4%. Spending increased 0.3%, in line with street estimates, while the personal savings rate decreased to 3.4%. Also, the advance estimate of U.S. GDP growth rate for second-quarter 2024, according to the Department of Commerce, has increased at an annual rate of 2.8% against the consensus estimate of 1.9%. The real GDP growth was 1.4% in the first quarter.

The Federal Open Market Committee kept the key interest rates unchanged at a 23-year high in the range of 5.25-5.50% on Jul 31. Fed Chairman Jerome Powell hinted that interest rates could be cut as early as September if the U.S. economy follows its expected path.

Investors are expecting at least three rate cuts by the central bank from September due to a favorable macroeconomic situation and a downtrend in inflation toward the Fed’s 2% inflation target. Investors can buy or hold mid-cap value mutual funds that provide excellent opportunities for those who seek returns with lesser risk by gaining exposure to mid-cap stocks that are available at a discounted price or are undervalued.

While large companies are normally known for stability and the smaller ones for growth, mid caps offer growth and stability simultaneously. Companies with market capitalization between $2 billion and $10 billion are generally considered mid-cap companies. These funds have the majority of their investments in sectors such as technology, finance, consumer durables and industrial cyclical, which will help investors in long-term growth and preservation of wealth.

Mutual funds, in general, reduce transaction costs and diversify their portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have, thus, selected four mid-cap value mutual funds that have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio of less than 1%.

T. Rowe Price Mid-Cap Value (TRMCX Quick QuoteTRMCX - Free Report) fund invests most of its assets along with borrowings, if any, in equity securities of companies with market capitalization within the range of the companies listed on 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 Apr 30, 2022. Most of the fund’s exposure is in companies like Western Digital (3.0%), MKS Instruments (2.4%), and Stanley Black & Decker (2.2%) as of Mar 31, 2024.

TRMCX has three-year and five-year annualized returns of 8.6% and 12.4%, respectively. The annual expense ratio of TRMCX is 0.80%.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Vanguard Selected Value (VASVX Quick QuoteVASVX - Free Report) fund invests most of its net assets in mid-cap domestic companies, which, according to the advisor, are undervalued. VASVX advisors consider a stock as undervalued if it is out of favor among investors, is trading at a price below average in relation to measures estimated such as earnings and book value, and has an above-average dividend yield.

Richard L. Greenberg has been the lead manager of VASVX since Feb 24, 2005. Most of the fund’s investments were in companies like Aercap Holdings (3.5%), Fidelity National Financial (1.7%) and TE Connectivity (1.7%) as of Jan 31, 2024.

VASVXhas three-year and five-year annualized returns of 7.8% and 11.8%, respectively. VASVX has an annual expense ratio of 0.43%. 

MFS Mid Cap Value (MVCKX Quick QuoteMVCKX - Free Report) fund invests most of its net assets in equity securities of mid-cap companies. MVCKX advisors consider mid-cap companies as those with market capitalization within the range of companies listed on the Russell Midcap Index over the last 13 months at the time of purchase.

Brooks A. Taylor has been the lead manager of MVCKX since Nov 20, 2008, and most of the fund’s investments are in companies like Hartford Financial (1.6%), Toll Brothers (1.5%) and AmerisourceBergen (1.3%) as of Mar 31, 2024.

MVCKX has three-year and five-year annualized returns of 6.4% and 10.4%, respectively. MVCKX has an annual expense ratio of 0.62%.

Fidelity Value (FVLKX Quick QuoteFVLKX - 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). FVLKX advisors preferably invest in medium-sized companies of domestic or foreign issues.

Matthew Friedman has been the lead manager of FVLKX since May 12, 2010, and most of the fund’s investments are in companies like Constellation Energy (1.6%), Antero Resources (1.1%) and PG&E (1%) as of Apr 30, 2024.

FVLKX has three-year and five-year annualized returns of 6.1% and 12.8%, respectively. FVLKX has an annual expense ratio of 0.78%.

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 >>