Value mutual funds are those that invest in undervalued stocks, and have low price-to-earnings ratio and high dividend yields. They provide excellent choices for investors looking for bargains. Value investing is always a popular strategy mainly because of its low P/Es, solid outlook and decent dividends. It not only provides less volatile returns as compared to growth funds but also offers growth of income and capital.
Value funds mostly comprise of companies that use their earnings to pay dividends. Investors interested in value funds should check the mutual fund yield, which is measured by dividing the dividend payment by the value of the mutual fund's shares.
Below we share with you four top-rated value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future.
Adirondack Small Cap (MUTF:ADKSX) primarily invests a major portion of its assets in a diversified portfolio which includes undervalued equity securities of small-cap companies. ADKSX seeks capital appreciation for the long run. The Adirondack Small Cap fund has year-to-date, three-year and five-year annualized returns of 5.2%, 4.4% and 8.8%, respectively.
ADKSX has an expense ratio of 1.32% compared to the category average of 1.43%.
Vanguard Value Index Fund (MUTF:VIVAX) seeks return by investing in the CRSP US Large Cap Value Index. VIVAX invests nearly all its assets in stocks of companies which are included in that particular large-cap index. The Vanguard Value Index Fund has year-to-date, three-year and five-year annualized returns of 7.9%, 9% and 12.8%, respectively.
Gerard O'Reilly is one of the fund managers of VIVAX since 1994.
Victory Sycamore Established Value Fund A (MUTF:VETAX) invests a large bulk of its assets in securities of companies which fall within the range of the Russell MidCap Value Index. VETAX seeks growth of capital for the long run by investing in both domestic and foreign companies. The Victory Sycamore Established Value Fund A has year-to-date, three-year and five-year annualized returns of 12.7%, 12.7% and 13.1%, respectively.
VETAX has an expense ratio of 0.99% compared to the category average of 1.23%.
DFA Tax Managed U.S. Targeted Value (MUTF:DTMVX) seeks appreciation of capital as well as aims to minimize federal taxes being charged on returns. DTMVX normally invests more than 80% of its assets in securities of domestic mid and small-cap companies. The DFA Tax Managed U.S. Targeted Value fund has year-to-date, three-year and five-year annualized returns of 6.4%, 6.4% and 11.6%, respectively.
As of June 2016, DTMVX held 1522 issues with 0.79% of its assets invested in Assurant Inc.