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18
There’s a wide dispersion among mid-value funds
these days. On Page
30
, you’ll see that the one-year
returns range from negative
4%
to
15%
. 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 things look cheerier, though
the range is still quite wide, going from
10%
to
23%
.
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 the best three-year returns of the group. The
fund has avoided the dismal basic-materials sector
while finding a wide variety of winners in health-
care, consumer, and financials industries. Manage-
ment takes a straightforward approach to value,
but it clearly won’t be fooled by value traps. The fund
has strong three- and 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, its
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
HBI
,
Royal Caribbean Cruises
RCL
, and
Micron
Technology
MU
have proved to be big winners
for the fund. The fund is up a nifty
21%
for the trailing
three years, and its five-year return is likewise
top third.
T. Rowe Price Mid-Cap Value
TRMCX
David Wallack has proved to be 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
100
and a downside
capture ratio of
86
. This means it 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.
Artisan Mid Cap Value
ARTQX
This fund is our one 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 has been
brutal for the fund.
McDermott International
MDR
,
Ensco
ESV
, and
Southwestern Energy
SWN
.
Even stocks outside energy like
Teradata
TDC
and
Coach
COH
have hurt. The long-term record
remains intact, though, and we believe the fund’s
strategy will return to favor.
K
Mid-Value Funds All Over the Map
Tracking Morningstar Analyst Ratings
|
Russel Kinnel
What Are Morningstar
Analyst Ratings?
Our ratings are chosen for long-
term success. Analysts assess
a fund’s competitive advantages
by analyzing people, process,
parent, performance, and price.
They do rigorous analysis and
then submit their ratings to a
committee that vets their work
for thoroughness and consistency.