Beat Market Volatility With These 3 Top-Ranked Mid-Cap Value Funds
The U.S. economy entered September on a mixed note, as market participants reacted to renewed inflation concerns and signs of softer economic activity. Federal Reserve Chair Kevin Warsh warned that inflation remains sticky and pushed up expectations for a quarter-point rate hike in September. Rising oil prices, fueled by escalating U.S.-Iran tensions, added another inflationary headache. While manufacturing and services activity remained in expansion territory, momentum softened in key areas. ISM manufacturing PMI slipped to 54.6 in August from 55.6 in July, while services PMI rose to 55.4 from 54.1.
The labor market also showed some cracks: job openings increased by 89,000 to 7.27 million in July, but hiring fell to 5.1 million, its lowest level since February. Private employers added just 38,000 jobs in August, and July hiring fell to 5.1 million, its lowest level since February. Consumer sentiment also weakened to 51.7 from 55.2 in July. With 10-year Treasury yields near 4.8%, the Fed faces a tricky balancing act, controlling inflation without putting too much pressure on economic growth.
Amid such market conditions, investors who seek higher returns than large-cap funds but less volatility than small-cap ones can opt for mid-cap mutual funds, such as Vaughan Nelson Mid Cap Fund VNVAX, Tcw Relative Value Mid Cap Fund TGVOX and Fidelity Value FDVLX as their major holdings to achieve the 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 with long-term growth and preservation of wealth.
Why Invest in Mid-Cap Value Mutual Funds?
Mid-cap value mutual funds provide excellent opportunities to seek returns with lower risk by offering 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-cap.
Value mutual funds are those that invest in stocks trading at discounts to their book value and have a low price-to-earnings ratio, along with high dividend yields. Value investing is always a coveted strategy, and for 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 and minimum initial investments of $5000, and carry a low expense ratio. Notably, 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).
Vaughan Nelson Mid Cap Fund invests most of its assets, along with borrowings if any, in mid-capitalization companies with market capitalizations within the range of companies listed in the Russell Midcap Value Index at the time of purchase. VNVAX advisors measure the performance of companies with lower price-to-book ratios and lower forecasted growth values.
Sundeep Khanna has been one of the managers of VNVAX since Oct. 25, 2024. Most of the fund’s investments were in companies like Burlington Stores (4.6%), CMS Energy (3.7%) and Evergy (3.7%) as of March 31, 2026.
VNVAX has three-year and five-year annualized returns of 18.4% and 10.3%, respectively. VNVAX has an annual expense ratio of 1.15%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Tcw Relative Value Mid Cap Fund invests most of its assets, along with borrowings, if any, in equity securities of mid-cap companies, which, according to its portfolio manager, are value companies. TGVOX advisors consider value companies as those that have fallen out of favor and whose stocks are selling below their real value.
Mona Eraiba has been the lead manager of TGVOX since April 3, 2020. Most of the fund’s investments were in companies like Entergy (3.2%), Jabil (3.1%) and Popular (2.9%) as of April 30, 2026.
TGVOX has three-year and five-year annualized returns of 18.2% and 11.4%, respectively. TGVOX has an annual expense ratio of 0.85%.
Fidelity Value fund invests in common stocks of medium-sized companies that possess fixed assets or are undervalued with respect to factors such as assets, earnings or growth potential based on the research of Fidelity Management & Research Company LLC (FMR). FDVLX advisors preferably invest in medium-sized companies of domestic or foreign issues.
Matthew Friedman has been the lead manager of FDVLX since May 13, 2010. Most of the fund’s investments were in companies like Western Digital (3%), PG&E (1.3%) and Iron Mountain (1.2%) as of April 30, 2026.
FDVLX has three-year and five-year annualized returns of 17.4% and 12.4%, respectively. FDVLX has an annual expense ratio of 0.69%.
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This article originally published on Zacks Investment Research (zacks.com).
