Major U.S. indexes have managed to give investors positive returns so far this year. The Dow, the S&P 500 and the tech-heavy Nasdaq have jumped 9%, 19% and 37%, respectively, over the year-to-date period. Due to the favorable inflation trend in the past couple of months, investors’ confidence has recovered from the past year. Though current inflation is still above the Fed’s ambitious target of 2%, investors are expecting the Federal Reserve to ease its monetary policy outlook in the near future.

The annual rise in the consumer price index (CPI) for October was marked the smallest in the past two years. CPI for October remains unchanged from the previous month at 0.4% on a seasonally adjusted basis. For 12 months through October, CPI climbed 3.2% after rising 3.7% in September before seasonal adjustment.

The Labor Department, on Dec 5, 2023, published that the job openings for October decreased to 8.7 million, the lowest since March 2021. Although job openings fell dramatically, the total number of hires and total separations changed little at 5.9 million and 5.6 million, respectively.

Apart from domestic issues, uncertainties in the stock markets also increased due to the Federal Reserve’s interest decision, which is due next week and the war between Israel and Hamas amid ceasefires. 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. These funds have the majority of their investments in sectors such as technology, finance, retail trade, 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 compared to the category average of 1.01.

Fidelity Value (FDVLX Quick QuoteFDVLX - 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). FDVLX advisors can also invest in domestic or foreign companies, irrespective of their market capitalization.

Matthew Friedman has been the lead manager of FDVLX since May 12, 2010. Most of the fund’s investments were in companies like PG&E (1.3%), Constellation Energy (1.3%) and Hess (1.2%) as of Jul 31, 2023.

FDVLX has a 3-year and 5-year annualized returns of 16% and 9.8%, respectively. FDVLX has an annual expense ratio of 0.86%. 

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, 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 (3.4%), TE Connectivity (1.8%) and Globe Life (1.7%) as of Jul 31, 2023.

VASVX has 3-year and 5-year annualized returns of 16% and 9.3%, respectively. VASVX has an annual expense ratio of 0.43%.

Victory Sycamore Established (VEVRX Quick QuoteVEVRX - Free Report) fund invests most of its net assets in equity securities of companies with market capitalizations within the range of companies listed in the Russell Midcap Value Index at the time of purchase. VEVRX advisors also invest in foreign companies that are traded in the United States, including American Depositary Receipts and Global Depositary Receipts.

Gary H. Miller has been the lead manager of VEVRX since Jul 30, 1998. Most of the fund’s investments were in companies like Ross Stores (1.8%), Yum! Brand (1.8%) and Flextronics (1.8%) as of Jun 30, 2023.

VEVRX has 3-year and 5-year annualized returns of 14% and 9.6%, respectively. VEVRX has an annual expense ratio of 0.54%.

BlackRock Mid-Cap Value Fund (MDRFX Quick QuoteMDRFX - 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. Most of the fund’s investments were 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 13% and 8.2%, respectively. MDRFX has an annual expense ratio of 0.99%.

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