3 Mid-Cap Value Fund Picks As Equity Funds Notch First Inflow
U.S.-based equity funds witnessed inflows for the first time this year, pointing to investors’ confidence in that category. Not only these funds, but the other broader categories also managed to attract significant volumes of investment for the week ending Mar. 9, according to Lipper. A strong recovery in the equity markets over the past one month was one of the major catalysts to the rebound. Under the U.S. equity fund category, mid-cap value mutual funds emerged as the top performers over the past one-month period, according to Morningstar. These mutual funds are known for their impressive returns at a lesser risk by virtue of exposure to stocks that are available at a discounted price. Perhaps this characteristic feature of mid-cap value mutual funds attracted investors to allocate their assets in them. Given this impressive scenario for mid-cap value mutual funds, we have highlighted those that are fundamentally strong and outperformed in recent times. Also, these have the potential to continue their impressive run in the near future. But before going to mid-cap value funds, let’s take a look at the fund inflows. Equity Funds’ First Inflows In 2016 According to Lipper, U.S. funds focusing on acquiring equity securities witnessed inflows of $4.6 billion in the week ending Mar. 9, snapping nine weeks of outflows. While equity funds with a domestic focus attracted $3.47 billion in investments, foreign equity funds saw net inflows of $1.1 billion. Additionally, funds that allocate the major part of their assets in equity securities of emerging markets registered inflows of $1.6 billion – the highest in more than 10 months. Moreover, technology funds registered net inflows for the first time this year by attracting $208 million. Other major sectors including energy, financial and real estate also enjoyed significant inflows last week. Meanwhile, the key categories apart from equity funds, namely taxable bond funds, money market funds and municipal bond funds witnessed net inflows of $5.8 billion, $2.4 billion and $518 million, respectively. However, treasury funds, which have attracted investor attention for the most part of this year, registered an outflow of $326 million. This was the second consecutive week of outflow for treasury funds. Factors Boosting Equities A strong rally in oil prices and encouraging economic data on the domestic front not only abated recessionary fears, but also gave the markets a boost in the trailing one-month period. Last week, the markets ended in the green for the fourth straight week and for the first time since Nov. 2015. Positive comments from the officials of major oil-producing countries regarding production freeze, continued decline in both domestic and global rig counts and expected decline in oil production this year propelled oil prices higher in recent times. Despite Monday’s decline of 3.6%, WTI crude rallied nearly 41.2% since Feb. 11, when it touched a 13-year low. Moreover, recently released economic data gave indications that the U.S. economy is on track for a gradual recovery. While better-than-expected job numbers and a significantly low unemployment rate of 4.9% point to a strong labor market, encouraging personal consumption, income and spending data signal a gradually growing economy. Upward revision in the fourth-quarter GDP rate also boosted investor sentiment. 3 Mid-Cap Value Mutual Funds To Buy As highlighted earlier, mid-cap value mutual funds benefited the most from the recent rebound in the U.S. equity fund categories. According to Morningstar, this category registered a gain of 14.6% over the past one month, which was the highest among the U.S. equity fund categories, indicating its popularity among investors. While large caps are normally known for stability and the smaller ones for growth, mid caps offer the best of both the worlds, allowing growth and stability simultaneously. Moreover, value investing has always been popular, and for good reasons. After all, who doesn’t want to find stocks that have low PEs, solid outlooks and decent dividends? Against this encouraging backdrop, we highlight three mid-cap value mutual funds that carry either a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund. These funds have encouraging one-month, three-month and year-to-date returns. The minimum initial investment is within $5,000. Also, these funds have a low expense ratio and no sales load. Managed Account Mid Cap Value Opp Fund No Load (MUTF: MMCVX ) invests the lion’s share of its assets in equity securities of companies with market capitalization similar to those listed in the S&P MidCap 400 Value Index. MMCVX may invest not more than 30% of its assets in foreign securities and in securities that are denominated in foreign currencies. Currently, MMCVX carries a Zacks Mutual Fund Rank #1. The product has one-month, three-month and year-to-date returns of 14.6%, 2.7% and 1%, respectively. It has no expense ratio. Touchstone Mid Cap Value Fund Adv (MUTF: TCVYX ) seeks growth of capital. TCVYX invests a large chunk of its assets in common stocks of companies having market capitalization within the range of the Russell Midcap Index. Currently, TCVYX carries a Zacks Mutual Fund Rank #2. The product has one-month, three-month and year-to-date returns of 15%, 3.8% and 2.4%, respectively. Annual expense ratio of 1.02% is lower than the category average of 1.19%. American Century Mid Cap Value Fund Inv (MUTF: ACMVX ) invests a major portion of its assets in securities of mid-cap companies. ACMVX seeks to follow the capitalization range of the Russell 3000 Index in order to select medium-size companies. Currently, ACMVX carries a Zacks Mutual Fund Rank #2. The product has one-month, three-month and year-to-date returns of 10.7%, 4.5% and 2.8%, respectively. Annual expense ratio of 1.01% is lower than the category average of 1.19%. Original post