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An Excellent Deep-Value Large-Cap Fund

An Excellent Deep-Value Large-Cap Fund
Securities In This Article
LSV Value Equity

Linda Abu Mushrefova: For investors seeking deep-value large cap exposure, LSV Value Equity is an excellent option. The fund earns a Morningstar Analyst Rating of Silver for its seasoned team and proven approach.

The fund benefits from a deep and stable bench. Josef Lakonishok co-founded LSV in 1994 and is supported by 10 additional investment professionals and three academic advisors. Comanager Menno Vermeulen, who created the firm’s proprietary quantitative model in the 1990s, is still responsible for data management and ongoing model enhancements. Together, the team boasts 20-plus years of industry experience, on average, and more than 13 years with the firm. Retention here has been exceptional. They have not seen any departures since 2008, when firm co-founder Robert Vishny retired.

The team has consistently applied its proprietary quant model to identify attractively valued large-cap stocks. It looks for companies with strong earnings, cash flows, and dividends. The fund’s deep value bias pushes it into cheaper and smaller-cap stocks than its typical large value Morningstar Category peer, and these stocks tend to be more volatile and have more downside risk. So while long-term results have been attractive, the ride has not always been smooth. Historically, it has captured more of its Russell 1000 Value Index benchmark’s upside but has not protected on the downside. Nevertheless, its risk-adjusted results over the long haul have justified this added volatility.

Despite short-term swings in performance, its disciplined approach should continue to reward patient investors over a full market cycle.

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About the Author

Linda Abu Mushrefova

Senior Product Manager, ETF's
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Linda Abu Mushrefova, CFA, is a manager research analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers equity strategies.

Before rejoining Morningstar in 2017, Mushrefova was an analyst on the fixed-income team at Neuberger Berman, covering opportunistic strategies. From 2013-16, she held a variety of roles at Morningstar, including as a product consultant and a data analyst for the firm's open-end and hedge fund databases.

Mushrefova holds a bachelor's degree in economics from Northwestern University. She also holds the Chartered Financial Analyst® designation.

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