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The domestic macroeconomic scenario in the United States is favorable for investors as the Federal Reserve could achieve a soft landing for the economy and curve down inflation. Inflation moved closer to the Fed’s 2% target in August, the Personal Consumption Expenditures Price Index, a gauge that the Fed focuses on, rose 0.1% for the month but fell 2.2% year over year, reaching its lowest since February 2021.
Also, the labor market data indicates no signs of deterioration as job openings rebound. The job openings unexpectedly increased 329,000 to 8.040 million in August after two straight monthly decreases. The Job Openings and Labor Turnover Survey (JOLTS) also showed layoffs declining as there were 1.13 job openings for every unemployed person in August compared to 1.08 in July. The cooling inflation and strength in the labor market will provide ample room for the Fed to act according to its plan of gradually bringing back the key interest rates to the 2.75-3% range by 2026.
In such market conditions, mid-cap value funds like T. Rowe Price Mid-Cap Value (TRMCX - Free Report) , Vanguard Selected Value (VASVX - Free Report) , MFS Mid Cap Value (MVCKX - Free Report) , Fidelity Value (FVLKX - Free Report) and Nuveen Mid Cap Value Premier (TRVPX - Free Report) are a good choice for investors seeking diversification across different sectors and 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.
Why Invest in Mid-Cap Value Mutual Funds?
Mid-cap funds are ideal investment options for high-return potential that comes with lower risk than small-cap funds. Mid-cap funds are not very susceptible to volatility in the broader markets, making it an ideal bet given that the macroeconomic conditions have generally offered a roller-coaster ride in recent years. Companies with market capitalization between $2 billion and $10 billion are generally considered mid-cap companies.
Value funds generally invest in stocks that tend to trade at a price lower than its fundamentals (i.e. earnings, book value, debt-equity). Value stocks are expected to outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets.
We have, thus, selected five 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 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 May 1, 2022. Most of the fund’s exposure is in companies like Corning (2.7%), Western Digital (2.4%), and MKS Instruments (2.4%) as of June 30, 2024.
TRMCX has three-year and five-year annualized returns of 11.6% and 14.8%, 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 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 25, 2005. Most of the fund’s investments were in companies like Aercap Holdings (3.4%), Baxter International (1.8%) and Fidelity National Financial (1.7%) as of April 30, 2024.
VASVX has three-year and five-year annualized returns of 10.3% and 13.8%, respectively. VASVX has an annual expense ratio of 0.43%.
MFS Mid Cap Value 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 March 31, 2024.
MVCKX has three-year and five-year annualized returns of 8.3% and 12.6%, respectively. MVCKX has an annual expense ratio of 0.62%.
Fidelity Value 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 13, 2010. Most of the fund’s investments are in companies like Constellation Energy (1.6%), Antero Resources (1.1%) and PG&E (1%) as of April 30, 2024.
FVLKX has three-year and five-year annualized returns of 8.3% and 15.5%, respectively. FVLKX has an annual expense ratio of 0.76%.
Nuveen Mid Cap Value Premier fund invests most of its net assets in equity securities of mid-cap domestic companies as defined by the fund's benchmark index, the Russell Midcap Value Index. TRVPX advisors choose to invest in undervalued stocks based on an evaluation of their potential worth.
David A Chalupnik has been the lead manager of TRVPX since Jan. 17, 2020. Most of the fund’s investments are in companies like Parker Hannifin (2.3%), Westinghouse Air Brake (2.2%) and Diamondback Energy (2.2%) as of April 30, 2024.
TRVPX has three-year and five-year annualized returns of 6.7% and 10.1%, respectively. TRVPX has an annual expense ratio of 0.61%.
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5 Mid-Cap Value Mutual Funds for Long-Term Gains
The domestic macroeconomic scenario in the United States is favorable for investors as the Federal Reserve could achieve a soft landing for the economy and curve down inflation. Inflation moved closer to the Fed’s 2% target in August, the Personal Consumption Expenditures Price Index, a gauge that the Fed focuses on, rose 0.1% for the month but fell 2.2% year over year, reaching its lowest since February 2021.
Also, the labor market data indicates no signs of deterioration as job openings rebound. The job openings unexpectedly increased 329,000 to 8.040 million in August after two straight monthly decreases. The Job Openings and Labor Turnover Survey (JOLTS) also showed layoffs declining as there were 1.13 job openings for every unemployed person in August compared to 1.08 in July. The cooling inflation and strength in the labor market will provide ample room for the Fed to act according to its plan of gradually bringing back the key interest rates to the 2.75-3% range by 2026.
In such market conditions, mid-cap value funds like T. Rowe Price Mid-Cap Value (TRMCX - Free Report) , Vanguard Selected Value (VASVX - Free Report) , MFS Mid Cap Value (MVCKX - Free Report) , Fidelity Value (FVLKX - Free Report) and Nuveen Mid Cap Value Premier (TRVPX - Free Report) are a good choice for investors seeking diversification across different sectors and 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.
Why Invest in Mid-Cap Value Mutual Funds?
Mid-cap funds are ideal investment options for high-return potential that comes with lower risk than small-cap funds. Mid-cap funds are not very susceptible to volatility in the broader markets, making it an ideal bet given that the macroeconomic conditions have generally offered a roller-coaster ride in recent years. Companies with market capitalization between $2 billion and $10 billion are generally considered mid-cap companies.
Value funds generally invest in stocks that tend to trade at a price lower than its fundamentals (i.e. earnings, book value, debt-equity). Value stocks are expected to outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets.
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 five 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 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 May 1, 2022. Most of the fund’s exposure is in companies like Corning (2.7%), Western Digital (2.4%), and MKS Instruments (2.4%) as of June 30, 2024.
TRMCX has three-year and five-year annualized returns of 11.6% and 14.8%, 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 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 25, 2005. Most of the fund’s investments were in companies like Aercap Holdings (3.4%), Baxter International (1.8%) and Fidelity National Financial (1.7%) as of April 30, 2024.
VASVX has three-year and five-year annualized returns of 10.3% and 13.8%, respectively. VASVX has an annual expense ratio of 0.43%.
MFS Mid Cap Value 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 March 31, 2024.
MVCKX has three-year and five-year annualized returns of 8.3% and 12.6%, respectively. MVCKX has an annual expense ratio of 0.62%.
Fidelity Value 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 13, 2010. Most of the fund’s investments are in companies like Constellation Energy (1.6%), Antero Resources (1.1%) and PG&E (1%) as of April 30, 2024.
FVLKX has three-year and five-year annualized returns of 8.3% and 15.5%, respectively. FVLKX has an annual expense ratio of 0.76%.
Nuveen Mid Cap Value Premier fund invests most of its net assets in equity securities of mid-cap domestic companies as defined by the fund's benchmark index, the Russell Midcap Value Index. TRVPX advisors choose to invest in undervalued stocks based on an evaluation of their potential worth.
David A Chalupnik has been the lead manager of TRVPX since Jan. 17, 2020. Most of the fund’s investments are in companies like Parker Hannifin (2.3%), Westinghouse Air Brake (2.2%) and Diamondback Energy (2.2%) as of April 30, 2024.
TRVPX has three-year and five-year annualized returns of 6.7% and 10.1%, respectively. TRVPX has an annual expense ratio of 0.61%.
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 >>