Major U.S. indexes are witnessing volatility, as the Consumer Price Index (CPI) hit its highest since last July. However, retail sales and jobless claims reflect economic resilience.
CPI increased 0.4% in December and 2.9% on an annual basis mostly due to a rise in the prices of gas, eggs and used cars. After reaching a 3.5-year low of 2.4% in September, inflation increased for the third straight month in a row. Market participants are closely watching President Donald Trumps’ economic policies that can not only boost economic growth but also spike inflation rates further.
According to a report published by the Department of Commerce, retail sales in December were up 0.4% sequentially and 3.9% year over year, indicating positive consumer demand despite the rise in inflation. The labor market data also indicated strength. During the week ending Jan. 11, jobless claims increased by 14,000 to 217,000 from the previous week’s revised level of 203,000. Continuing claims were down 18,000 to 1,859,000 from the previous week’s revised level of 1,877,000.
Thus, investors who seek higher returns than large-cap funds but less volatility than the small-cap ones can opt for mid-cap mutual funds like T. Rowe Price Mid-Cap Value TRMCX, JPMorgan Mid Cap Value Fund JAMCX and Nuveen Mid Cap Value TCMVX 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 for investors seeking returns with lesser risk by gaining 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 caps.
Value mutual funds are those that invest in stocks trading at discounts to book value and have a low price-to-earnings ratio along with high dividend yields. Value investing is always a coveted strategy, and for a 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 three mid-cap value mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio. 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).
T. Rowe Price Mid-Cap Value fund invests most of its assets, along with borrowings, if any, in equity securities of companies with market capitalization within the range of the companies listed on either the S&P MidCap 400 Index or the Russell Midcap Value Index at the time of purchase.
Vincent Michael DeAugustino has been the lead manager of TRMCX since May 1, 2022. Most of the fund’s exposure was in companies like Corning (3.1%), Select Medical (2.1%) and Kenvue (2.1%) as of Sept. 30, 2024.
TRMCX has three-year and five-year annualized returns of 9.8% and 12.6%, respectively. The annual expense ratio of TRMCX is 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JPMorgan Mid Cap Value Fund invests most of its assets, along with borrowings, if any, in equity securities of mid-cap companies. JAMCX advisors consider mid-cap companies as the ones with market capitalization similar to those listed on the Russell Midcap Value Index at the time of purchase.
Lawrence E. Playford has been the lead manager of JAMCX since Dec. 31, 2004. Most of the fund’s investments were in companies like Ameriprise Financial (2%), The Williams Companies (1.8%) and Loews Corporation (1.8%) as of Sept. 30, 2024.
JAMCX has three-year and five-year annualized returns of 4.9% and 8.4%, respectively. JAMCX has an annual expense ratio of 1.1%.
Nuveen Mid Cap Value fund invests most of its net assets in domestic mid-cap equity securities as defined by the fund's benchmark index, i.e. Russell Midcap Value Index. TCMVX advisors generally invest in companies that are undervalued than its potential worth by the markets.
David A Chalupnik has been the lead manager of TCMVX since Jan. 17, 2020, and most of the fund’s investments are in companies like Fidelity National Information Services (2.4%), Gen Digital (2.3%) and FirstEnergy (2%) as of Oct. 31, 2024.
TCMVX has three-year and five-year annualized returns of 4.3% and 7.4%, respectively. TCMVX has an annual expense ratio of 0.76%.
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