The United States financial markets remain robust, characterized by strong growth. However, signs of a cooling labor market, persistent inflationary pressures, and political instability are causes for concern among investors. Strong consumer spending, solid personal income growth, and considerable investment in the technology and innovation sectors are fueling economic growth. Still, the pace is decelerating, and several warning signs suggest a more cautious outlook rather than a booming expansion.

The Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge, has remained above its 2% target for over four years, marking the longest streak since 1995. The most recent government shutdown, the longest in history, caused consumer sentiment to drop to 50.3 in early November, the lowest in 3.5 years. Real GDP growth, which was 3.8% in Q2, is expected to slow to 1% this quarter, according to economists' estimates. The Fed, in its effort, implemented 25-basis-point interest rate cuts for two consecutive months to balance overall growth against simultaneous threats from persistent inflation, a weakening labor market, and the ongoing trade disputes.

Amid such market conditions, investors who seek higher returns than large-cap funds but less volatility than the small-cap ones can opt for mid-cap mutual funds, such as Tcw Relative Value Mid Cap Fund (TGVOX Quick QuoteTGVOX - Free Report) , Vanguard Whitehall Funds, Selected Value Fund (VASVX Quick QuoteVASVX - Free Report) , Fidelity Value (FDVLX Quick QuoteFDVLX - Free Report) and Dean Mid Cap Value (DALCX Quick QuoteDALCX - Free Report) as their major holdings to achieve their investment objective.

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 value mutual funds provide excellent opportunities to seek returns with lesser risk by offering exposure to stocks that are available at a discounted price. While large companies are normally known for stability and the 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.

Value mutual funds are those that invest in stocks trading at discounts to their book value and have a low price-to-earnings ratio, along with high dividend yields. Value investing is always a coveted strategy, and for good reason. After all, who doesn’t want to add stocks that have low PEs, a solid outlook and decent dividends? However, not all value funds solely comprise companies that primarily use their earnings to pay out dividends. Investors interested in choosing value funds for yield should surely check the mutual fund yield.

We have thus selected four mid-cap value mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns and minimum initial investments of $5000, and carry a low expense ratio of less than 1%. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Tcw Relative Value Mid Cap Fund invests most of its assets, along with borrowings, if any, in equity securities of mid-cap companies, which, according to its portfolio manager, are value companies. TGVOX advisors consider value companies as those that have fallen out of favor and whose stocks are selling below their real value.

Mona Eraiba has been the lead manager of TGVOX since April 3, 2020. Most of the fund’s investments were in companies like Popular (4.5%), Equitable Holdings (3.9%) and Jones Lang LaSalle (3.7%) as of July 31, 2025.

TGVOX has three-year and five-year annualized returns of 19.5% and 17.1%, respectively. TGVOX has an annual expense ratio of 0.85%.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Vanguard Whitehall Funds, 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 investors’ favor, 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%), Corebridge Financial (2%) and Baxter International (1.4%) as of July 31, 2025.

VASVX has three-year and five-year annualized returns of 19.4% and 17.5%, respectively. VASVX has an annual expense ratio of 0.36%. 

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). FDVLX advisors preferably invest in medium-sized companies of domestic or foreign issues.

Matthew Friedman has been the lead manager of FDVLX since May 13, 2010. Most of the fund’s investments were in companies like PG&E (1.4%), Ventas (1%) and Eversource Energy (1%) as of April 30, 2025.

FDVLX has three-year and five-year annualized returns of 16.7% and 17.4%, respectively. FDVLX has an annual expense ratio of 0.71%.

Dean Mid Cap Value fund invests most of its net assets in equity securities of domestic medium-sized companies with market capitalizations similar to companies listed on the Russell MidCap Value Index at the time of investment. DALCX advisors also invest in securities convertible into common stocks, REITs, and master limited partnerships.

Douglas Allen Leach has been the lead manager of DALCX since June 30, 2008. Most of the fund’s investments were in companies like The Bank of New York Mellon (2.7%), Dollar General (2.2%) and L3Harris Technologies (2.2%) as of June 30, 2025.

DALCX has three-year and five-year annualized returns of 16.2% and 15.5%, respectively. DALCX has an annual expense ratio of 0.85%.

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