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3 Mid-Cap Value Mutual Funds to Invest in Amid High Volatility
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After a collapse in 2022, Wall Street managed to recover in the first half of this year. The Consumer Price Index, which is the most accepted gauge for inflation, registered a favorable declining trend till June to 3% year on year due to the Federal Reserve’s aggressive monetary policy tightening.
Inflation numbers increased to 3.2% year on year in July, and 3.7% in August and September. Though current inflation is well above the Fed’s 2% target, economists fear that further rate hikes would cripple the economy if the Fed fails to make a soft landing for the economy.
The S&P 500, the DOW and the Nasdaq have still managed to give positive returns of 13.2%, 2.3%, and 29.2%, respectively, so far this year. The current overnight interest rate, which is in the range of 5.25-5.5%, is the highest in 22 years. Such high interest rates have pushed the cost of borrowing higher in a range that the average Americans and corporations are not used to, thereby impacting corporate profitability.
The labor department reported on Nov 9 that new claims for unemployment benefits edged down in the week ended Nov 4 by 3,000 to a seasonally adjusted 217,000. This indicated that the job market is still strong despite some signs of cooling. The Fed expects further easing in the labor market to get rid of sticky inflation.
Apart from domestic issues, volatility in the stock markets also increased due to the war in the Middle East between Israel and the Palestine-based militant group Hamas. Amid such high volatility, mid-cap value mutual funds provide excellent opportunities for investors seeking returns with lesser risk by gaining exposure to mid-cap stocks that are available at a discounted price or undervalued.
While large companies are normally known for stability and 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.
We have, thus, selected three 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 compared to the category average of 1.01.
Fidelity Value Fund (FVLKX - Free Report) invests in common stocks of medium-sized companies that possess value 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 can also invest in domestic or foreign companies, irrespective of its market capitalization.
Matthew Friedman has been the lead manager of FVLKX since May 12, 2010, and most of the fund’s investments is in companies like PG&E (1.3%), Constellation Energy (1.25%) and Hess (1.2%) as of Jul 31, 2023.
FVLKX has a 3-year and 5-year annualized returns are 19.1% and 8.8%, respectively. FVLKX has annual expense ratio of 0.77%.
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 - 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, 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, and most of the fund’s investments is in companies like Aercap Holdings (3.4%), TE Connectivity (1.8%) and Globe Life (1.7%) as of Jul 31, 2023.
VASVX has 3-year and 5-year annualized returns of 18.3% and 8.1%, respectively. VASVX has an annual expense ratio of 0.43%.
BlackRock Mid-Cap Value Fund (MDRFX - Free Report) invests most of its assets along with borrowings, if any, in a diversified portfolio of equity securities of mid-cap companies. MDRFX advisors, under normal market conditions, prefer to invest in dividend-paying securities.
Tony DeSpirito has been the lead manager of MDRFX since Jun 11, 2017, and most of the fund’s investments is in companies like Leidos Holdings (2.4%), Cognizant Technologies (2.3%) and Baxter International (2.3%) as of Jul 31, 2023.
MDRFX has 3-year and 5-year annualized returns of 15.2% and 7.4%, respectively. MDRFX has an annual expense ratio of 0.99%.
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3 Mid-Cap Value Mutual Funds to Invest in Amid High Volatility
After a collapse in 2022, Wall Street managed to recover in the first half of this year. The Consumer Price Index, which is the most accepted gauge for inflation, registered a favorable declining trend till June to 3% year on year due to the Federal Reserve’s aggressive monetary policy tightening.
Inflation numbers increased to 3.2% year on year in July, and 3.7% in August and September. Though current inflation is well above the Fed’s 2% target, economists fear that further rate hikes would cripple the economy if the Fed fails to make a soft landing for the economy.
The S&P 500, the DOW and the Nasdaq have still managed to give positive returns of 13.2%, 2.3%, and 29.2%, respectively, so far this year. The current overnight interest rate, which is in the range of 5.25-5.5%, is the highest in 22 years. Such high interest rates have pushed the cost of borrowing higher in a range that the average Americans and corporations are not used to, thereby impacting corporate profitability.
The labor department reported on Nov 9 that new claims for unemployment benefits edged down in the week ended Nov 4 by 3,000 to a seasonally adjusted 217,000. This indicated that the job market is still strong despite some signs of cooling. The Fed expects further easing in the labor market to get rid of sticky inflation.
Apart from domestic issues, volatility in the stock markets also increased due to the war in the Middle East between Israel and the Palestine-based militant group Hamas. Amid such high volatility, mid-cap value mutual funds provide excellent opportunities for investors seeking returns with lesser risk by gaining exposure to mid-cap stocks that are available at a discounted price or undervalued.
While large companies are normally known for stability and 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.
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 three 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 compared to the category average of 1.01.
Fidelity Value Fund (FVLKX - Free Report) invests in common stocks of medium-sized companies that possess value 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 can also invest in domestic or foreign companies, irrespective of its market capitalization.
Matthew Friedman has been the lead manager of FVLKX since May 12, 2010, and most of the fund’s investments is in companies like PG&E (1.3%), Constellation Energy (1.25%) and Hess (1.2%) as of Jul 31, 2023.
FVLKX has a 3-year and 5-year annualized returns are 19.1% and 8.8%, respectively. FVLKX has annual expense ratio of 0.77%.
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 - 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, 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, and most of the fund’s investments is in companies like Aercap Holdings (3.4%), TE Connectivity (1.8%) and Globe Life (1.7%) as of Jul 31, 2023.
VASVX has 3-year and 5-year annualized returns of 18.3% and 8.1%, respectively. VASVX has an annual expense ratio of 0.43%.
BlackRock Mid-Cap Value Fund (MDRFX - Free Report) invests most of its assets along with borrowings, if any, in a diversified portfolio of equity securities of mid-cap companies. MDRFX advisors, under normal market conditions, prefer to invest in dividend-paying securities.
Tony DeSpirito has been the lead manager of MDRFX since Jun 11, 2017, and most of the fund’s investments is in companies like Leidos Holdings (2.4%), Cognizant Technologies (2.3%) and Baxter International (2.3%) as of Jul 31, 2023.
MDRFX has 3-year and 5-year annualized returns of 15.2% and 7.4%, respectively. MDRFX has an annual expense ratio of 0.99%.
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 >>