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The Best Value Funds

These mutual funds and ETFs invest in value stocks and earn top ratings from Morningstar heading into 2024.

Mutual funds artwork
Securities In This Article
Vanguard S&P Mid-Cap 400 Value Idx I
LSV Small Cap Value Institutional
Vanguard Small Cap Value Index Admiral
Dodge & Cox Stock I
Vanguard Mid-Cap Value Index Admiral

After staging a brief rebound in 2022, value stocks are again lagging growth stocks: The Morningstar US Growth Index is outperforming the Morningstar US Value Index by more than 25 full percentage points in 2023.

Should Investors Buy Value Stock Funds Today?

Investors who own core stock mutual funds or exchange-traded funds—especially those tracking a broad-market index such as the S&P 500 or Wilshire 5000 Index—already have exposure to value stocks. They’re diversified. It’s unlikely they need to add more value to their portfolios, as they already have plenty.

However, some investors may think value stocks are the place to be, and they’d like to tilt their portfolios toward that style, especially given the relative underperformance of value stocks versus growth stocks. For such investors, there are many fine value stock ETFs and mutual funds to choose from. Here, we’re shining a spotlight on those that land in the U.S. large-value, mid-value, or small-value Morningstar Categories and have at least one share class that earns the top Morningstar Medalist Rating of Gold. (We expect such highly rated funds to outperform over a full market cycle.)

The Best Value ETFs and Mutual Funds to Buy

These ETFs and mutual funds focus on value stocks and had at least one share class that earned top Morningstar Medalist Ratings of Gold with 100% analyst coverage as of Dec. 13, 2023.

  1. American Funds American Mutual AMRMX
  2. Diamond Hill Large Cap DHLYX
  3. Dodge & Cox Stock DODGX
  4. Harbor Mid Cap Value HAMVX
  5. John Hancock Disciplined Value Mid Cap JVMIX
  6. JPMorgan Equity Income OIEJX
  7. LSV Small Cap Value LSVQX
  8. MFS Mid Cap Value MCVRX
  9. MFS Value MEIJX
  10. Oakmark Fund OAKMX
  11. Schwab US Dividend Equity ETF SCHD
  12. Vanguard High Dividend Yield Index/ETF VHYAX VYM
  13. Vanguard Mid-Cap Value Index/ETF VMVAX VOE
  14. Vanguard Russell 1000 Value Index VRVIX
  15. Vanguard S&P Mid-Cap 400 Value Index VMFVX
  16. Vanguard S&P Small-Cap 600 Value Index VSMVX
  17. Vanguard Small-Cap Value Index/ETF VSIAX VBR
  18. Vanguard Value Index/ETF VVIAX VTV
  19. Victory Sycamore Established Value VEVRX

How Do Value Mutual Funds and ETFs Work?

Value funds are bargain-hunters: They all want to buy stocks below what they’re worth and then hold on as those stocks (hopefully) reach fair value. They’re unwilling to pay a premium to invest in a stock, no matter how appealing its prospects.

However, there are many different ways that value stock managers invest. Some take what’s known as a deep-value approach, focusing on fundamental valuation benchmarks, such as price/earnings, price/book, or price/sales, and little else. Others blend low valuations with a quality screen, thereby avoiding stocks of less profitable and more troubled businesses. Some managers will go where the values are, no matter the size of the companies, while others will skew toward the stocks of large companies or, at the other end of the spectrum, the stocks of smaller companies.

Other differences exist, too. Some value funds, for instance, place a greater emphasis on dividend-paying stocks, while other value funds don’t have dividends on the brain—income is secondary, if it’s considered at all. Some value funds maintain compact portfolios consisting of 50 or so securities, while others own hundreds of stocks. Those preferences can lead to different performance and risk profiles. And of course, some value funds are led by managers who actively pick stocks while other value funds simply index.

The bottom line: Do your research before you buy. Our Medalist Ratings are just a starting point.

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How to Find Value Funds for the Long Term

Given their high Morningstar Medalist Ratings, we expect the top-rated value stock funds on our list to outperform over a full market cycle.

That being said, investors may want to expand their search for value funds beyond this list, using parameters that matter to them. Here are just two additional ways to find value ETFs and mutual funds to investigate further.

  • Some investors may prefer a list of top-rated funds that invest in value stocks around the globe, not just in U.S. names. Using the Morningstar Investor screener, select Investment Type (either ETF or Mutual Fund), scroll down to Criteria to find the Morningstar Category drop-down menu, and select Global Large-Stock Value (if you want funds that invest in both international and U.S. large-cap value stocks) or Foreign Large Value and Foreign Small/Mid Value (if you want to exclude U.S. value stocks). Then, under Ratings, choose Gold for the Morningstar Analyst Rating.
  • Want to find a complete list of value stock ETFs or mutual funds available today, not just those with our highest Analyst Ratings? Using the Morningstar Investor screener tool, select Investment Type (either ETF or Mutual Fund) and choose the Morningstar Category—Large Value, Mid-Cap Value, or Small Value—that you prefer. Or choose all three.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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