Investors looking for bargain, i.e., stocks at a discount, are mostly interested in investing in value stocks. Value stocks are stocks that tend to trade at a price that is lower than its fundamentals (i.e. earnings, book value, Debt-Equity). Fundamentals consist of a company’s financial and operational data. If the fundamental and operational data is solid and the company is creating additional shareholder value by generating consistent growth, then the share price should eventually reflect that.
It is common for some investors to invest in value funds for the income or yield. However, not all value funds are comprised solely of companies that primarily use their earnings to pay dividends. Investors interested in choosing value funds for yield, should be sure to check the mutual fund yield. The mutual fund yield is the dividend payments divided by the value of the mutual fund’s shares. The mutual fund yield is available on the mutual funds quote page on the Zacks website.
Below we will share with you 5 potential value mutual funds. Each has earned either a Zacks #1 Rank (Strong Buy) or aZacks #2 Rank (Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all value funds, investors can click here to see the complete list of funds.
Fidelity Advisor Value A (FAVFX - MF report) seeks capital growth over the long run. The fund generally invests in mid cap companies that Fidelity Management & Research Company (FMR) consider as undervalued depending on factors including impressive earnings and asset growth prospects. It focuses on acquiring common stocks and may also invest in large and small cap companies. It invests in companies throughout the globe. The value mutual fund has a three-year annualized return of 18.9%.
As of November 2014, this fund held 296 issues with 1.63% of its assets invested in Sempra Energy.
Neuberger Berman Large Cap Value Investor (NPRTX - MF report) invests a lion’s share of its assets in value stocks of large cap companies having market capitalizations similar to those included in the Russell 1000 Value Index. The fund focuses on acquiring stocks of those companies that are belived to have solid earnings growth potential. It may also invest in non-US companies. The value mutual fund has a three-year annualized return of 16%.
Eli M. Salzmann is the fund manager and has managed this fund since 2011.
T. Rowe Price Value (TRVLX - MF report) seeks long term capital growth. The fund invests a minimum of 65% of its assets in undervalued companies. Though it focuses on acquiring common stocks of large cap companies, it may also invest in small and mid cap companies. It may also invest in non-US companies besides investing in domestic firms. The value mutual fund has a three-year annualized return of 19.6%.
The fund has an expense ratio of 0.84% as compared to category average of 1.13%.
Stratton Mid Cap Value (STRGX - MF report) maintains a diversified portfolio by investing in common stocks of mid cap companies having market capitalizations identical to those enlisted in the Russell Midcap Index. The fund seeks long term capital appreciation with current income derived from interest and dividend payments. The value mutual fund has a three-year annualized return of 16.4%.
As of December 2014, this fund held 49 issues with 3.55% of its assets invested in Skyworks Solutions Inc.
Thornburg Value A (TVAFX - MF report) seeks capital growth over the long run. The fund generally invests in value stocks of the US companies having a bright prospect. It may also invest in other securities including non-US equities, debt obligations and partnership interests. It primarily invests in large and mid cap companies. The value mutual fund has a three-year annualized return of 16.1%.
Connor Browne is the fund manager and has managed this fund since 2006
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