Investors interested in deriving safer returns by allocating their assets in undervalued securities may consider mid-cap value mutual funds. While mid caps offer the best of both large- and small-cap mutual funds, allowing growth and stability simultaneously, value funds are known for income or yield. Value funds are those that tend to trade at prices lower than their fundamentals (i.e. earnings, book value, debt-to-equity). However, not all value funds solely comprise companies that primarily use their earnings to pay dividends.
Meanwhile, companies with market capitalization between $2 billion and $10 billion are generally considered mid-cap firms. While mid-cap funds are expected to have a higher growth potential than the large-cap ones, they are believed to experience a lower level of volatility than their small-cap counterparts.
Below we share with you three top-rated mid-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of mid-cap value funds.
American Beacon Mid Cap Value Investor AMPAX invests a major portion of its assets in equity securities of companies with market capitalization within the range of the Russell Midcap Index. AMPAX primarily focuses on acquiring securities of companies domiciled in the U.S. American Beacon Mid Cap Value Investor has a three-year annualized return of 6.6%.
As of July 2016, AMPAX held 116 issues with 2.41% of its assets invested in S+p Mid 400 EminiSep16 Xcme 20160916.
Sterling Capital Mid Value A OVEAX seeks long-term growth of capital. OVEAX invests the majority of its assets in equity securities of undervalued mid cap companies. According to advisors, a mid cap company is defined as one with market capitalization within $1 billion to $30 billion. OVEAX predominantly invests in common stocks of both domestic and foreign firms that are traded in the U.S. Sterling Capital Mid Value A has a three-year annualized return of 7.2%.
OVEAX has an expense ratio of 1.19% as compared to the category average of 1.21%.
MassMutual Select Mid-Cap Value A MLUAX seeks long-term capital appreciation. MLUAX invests a major portion of its assets in equity securities of undervalued mid-capitalization companies. Equity securities include common stocks, preferred stocks, securities convertible into common or preferred stocks, stock futures contracts, stock index futures contracts, rights, and warrants. MassMutual Select Mid-Cap Value A has a three-year annualized return of 6.4%.
As of June 2016, MLUAX held 173 issues with 1.8% of its assets invested in PG&E Corp.
To view the Zacks Rank and past performance of all mid-cap value mutual funds, investors can click here to see the complete list of mid-cap value funds.
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