Back to top

Image: Bigstock

4 Mid Cap Value Mutual Funds To Buy Amid Market Slump

Read MoreHide Full Article

All the three key U.S. indexes registered weekly declines last week, following uncertainty over the “Brexit” referendum on June 23. Also, the Fed’s decision to keep its rates unchanged in its two-day policy meeting last week had a negative impact on the benchmarks. The Dow posted its worst weekly fall since May 13 while the S&P 500 and the Nasdaq suffered their biggest weekly decline since April 29.

Following this slump in markets, the addition of mid-cap value mutual funds to one’s portfolio might prove to be one of the most suitable investment options. This fund category should suit investors interested in deriving safer returns by parking their assets in undervalued securities. But what cooked up the storm?

Feeble Chances of Fed Rate Hike

After the end of its two-day policy meeting, the Federal Open Market Committee (FOMC) kept its rates unchanged at a range of 0.25% to 0.5%. The key reason for this decision as cited by the FOMC is a slow “pace of improvement in the labor market,” despite stable “growth in economic activity.” As revealed by the job data, “the unemployment rate has declined,” but overall “job gains have diminished.”

Moreover, the Fed’s 2016 rate hike plan also appears to be on shaky ground with just six of the 17 policymakers forecasting one rate hike this year, compared to only a similar view by only one Fed official in March. Fed chairwoman Janet Yellen said: "I'm not comfortable to say it's in the next meeting or two, but it could be…It's not impossible that by July, for example, we would see data that led us to believe that we are in a perfectly fine course."

Further, the central bank expects the key inflation rate to remain “low in the near term." Additionally, the fed funds rate is now expected to be 3% in the long run compared with the earlier projection of 3.3%.

Uncertainty on “Brexit” Vote

Adding to investor woes were global growth concerns following speculation that the U.K. might “leave” the European Union. In the past few weeks, several poll results stressed that Britain may opt for a “Brexit” in the June 23 referendum.

Meanwhile, the demise of British Labor Party politician Jo Cox in a shooting, temporarily suspended the campaign regarding the referendum. Cox was an active campaigner in favor of the country remaining in the European Union.

Concerns over “Brexit” continued to weigh on both the global and domestic markets. Also, the Fed chairperson said that “Brexit” is likely to have "consequences for economic and financial conditions in global financial markets." It is speculated that the domestic market will remain under pressure until the “Brexit” vote results are revealed.

Buy These 4 Mid-Cap Value Mutual Funds

Despite these roadblocks, investors may consider investing in mid-cap value mutual funds. Value funds are selected because these normally deal with undervalued stocks and mostly comprise dividend-paying companies. Also, mid-cap funds tend to have lesser risk unlike small-cap funds and are expected to provide better returns than its large-cap counterparts.

We have selected four mid-cap mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date, three-year and five-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

Perkins Mid Cap Value D (JNMCX - Free Report) seeks long-term capital growth. JNMCX invests a large chunk of its assets in ‘value’ stocks of companies having market capitalization within the range of the Russell Midcap Value Index. Perkins Mid Cap Value D has a year-to-date, three-year and five-year annualized returns of 5.7%, 7.2% and 8.1%, respectively. JNMCX has an expense ratio of 0.58% as compared to the category average of 1.18%. JNMCXhas a Zacks Mutual Fund Rank #1.

Managed Account Mid Cap Value Opportunities  invests the lion’s share of its assets in equity securities of companies with market capitalization similar to those listed in the S&P MidCap 400 Value Index. Managed Account Mid Cap Value Opportunities has a year-to-date, three-year and five-year annualized returns of 7.8%, 7.8% and 10.6%, respectively. JNMCX has an expense ratio of 0.00% as compared to the category average of 1.18%. MMCVXhas a Zacks Mutual Fund Rank #1.

T. Rowe Price Mid-Cap Value (TRMCX - Free Report) seeks capital growth for the long run. TRMCX invests more than 80% of its assets in companies having market capitalization within the range of the Russell Midcap Value Index or the S&P MidCap 400 Index. T. Rowe Price Mid-Cap Value has a year-to-date, three-year and five-year annualized returns of 9.4%, 10% and 11.3%, respectively. TRMCX has an expense ratio of 0.80% as compared to the category average of 1.18%.TRMCXhas a Zacks Mutual Fund Rank #2.

American Beacon Mid Cap Value Investor  invests a major portion of its assets in equity securities of companies with market capitalization within the range of the Russell Midcap Index. American Beacon Mid Cap Value Investor has a year-to-date, three-year and five-year annualized returns of 1.2%, 7.2% and 10.5%, respectively. AMPAX has an expense ratio of 1.09% as compared to the category average of 1.18%. AMPAXhas a Zacks Mutual Fund Rank #1.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the help of Zacks Rank.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


T. Rowe Price Mid-Cap Value (TRMCX) - free report >>

Janus Henderson Mid Cap Value D (JNMCX) - free report >>

Published in