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Mid-Value Funds All Over the Map

Most of Morningstar's top Medalists are shining in a pack of broad returns.

Russel Kinnel, 07/27/2015

There's a wide dispersion among mid-value funds these days. The range of returns for the 12 months through June 30, 2015, spans an 11.6% gain to a 19.0% loss. Funds that favor utilities, energy, and other commodities are hurting a bit, while those favoring health-care, tech, and consumer stocks are feeling fine. Go out to three years and annualized returns look cheerier, though the range is still quite wide, going from near-zero to a high 34% annual gain, on average.

The group is worth a look because the best stock-pickers make it their home.

Diamond Hill Small-Mid Cap DHMAX 
This fund has a Morningstar Analyst Rating of Gold and a top-quintile three-year return. The fund has avoided the dismal basic-materials sector while finding a wide variety of winners in health-care, consumer, and financials industries. Manage­ment takes a straightforward approach to value, but it clearly won't be fooled by value traps. The fund has strong five-year numbers, and come December it should have pretty strong 10-year numbers, too.

Vanguard Selected Value VASVX 
Now that the fund has three subadvisors, this Gold-rated offering's sector weightings don't really stand out from the category. Deep-value firm Pzena was added last year to join Barrow, Hanley, Mewhinney & Strauss and Donald Smith & Co. The fund is still distinctive with stock selection. Names like Hanesbrands HBIRoyal Caribbean Cruises RCL, and Micron Technology MU have proved to be big winners. The fund is up a nifty 19% for the trailing three years, and its five-year return is just outside the top third.

T. Rowe Price Mid-Cap Value TRMCX 

David Wallack has shown that he's a thoughtful value investor who won't follow the crowd. He has actually dialed up exposure to beaten-down basic-materials stocks in recent years, and he's remained shy of the hot tech sector. That's been a handicap in the short run, but stock selection has largely overcome that challenge. Names like Hospira HSP and E*Trade Financial ETFC have been winners. The Gold-rated fund is closed to new investors.

American Century Mid Cap Value ACMVX  
This closed fund has a stellar long-term record, but its three-year returns are right at the Morningstar Category average. That's actually decent for a fund focused on the downside. Its caution is designed to pare losses in a bear market, and it has. It has a 10-year upside capture ratio of 98 and a downside capture ratio of 87. This means the Silver-rated fund keeps pace in rallies but outperforms in down markets.

Fidelity Low-Priced Stock FLPSX 
Joel Tillinghast's three-year returns are middling, but he's got strong results over longer time periods. Tillinghast manages to make a giant portfolio work over the long haul. Relative to peers, he has quite a bit more in consumer cyclical names and tech stocks. He has much less than peers in utilities and real estate. The fund earns a Silver rating.

Artisan Mid Cap Value ARTQX 
This fund is a laggard. Its slump has been deep enough to lead us to lower its rating to Silver from Gold. Besides the slump, we're concerned that team founder Scott Satterwhite is set to retire in October 2016. An array of energy stocks like McDermott International MDREnsco ESV, and Southwestern Energy SWN has been brutal for the fund. Even stocks outside energy like Teradata TDC and Coach COH have hurt. The long-term record remains intact, though, and we believe the funds strategy will return to favor. 


Russel Kinnel is Morningstar's director of mutual fund research. He is also the editor of Morningstar FundInvestor, a monthly newsletter dedicated to helping investors pick great mutual funds, build winning portfolios, and monitor their funds for greater gains. (Click here for a free issue). Mr. Kinnel would like to hear from readers, but no financial-planning questions, please. Follow Russel on Twitter: @russkinnel.

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