The Nasdaq Composite, the Dow Jones Industrial Average and the S&P 500 have risen 12.4%, 7.2% and 10.6% so far this year. This positive momentum has largely been driven by the cooling of the U.S. labor market, which has strengthened hopes for an early interest rate cut by the Federal Reserve among market participants. However, concerns over President Trump’s recently implemented tariffs remain, as these have caused a sharp widening of the U.S. trade deficit and created uncertainty for businesses.
The U.S. economy’s Gross Domestic Product (GDP) for the second quarter was revised upward to a 3.3% annual growth rate after a brief contraction earlier this year. GDP numbers were primarily driven by a significant decrease in imports and a modest increase in consumer spending. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index for the month of July held steady at 2.6% year over year. However, core prices (excluding food and energy) edged higher to 2.9%, the highest level in five months. The number of Americans applying for unemployment benefits saw a slight increase for the week ending Aug. 30, rising by 8,000 to 237,000. Jobless claims have largely remained within a healthy range. Economists are warning of potential recessionary pressure or stagflation due to a combination of factors, including sluggish job growth, persistent inflation and the impact of trade policies.
Amid such market conditions, investors who seek higher returns than large-cap funds but less volatility than the small-cap ones can opt for mid-cap mutual funds, such as Tcw Relative Value Mid Cap Fund TGVOX, Vanguard Whitehall Funds, Selected Value Fund VASVX and T. Rowe Price Mid-cap Value Fund TRMCX 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.
Mid-cap value mutual funds provide excellent opportunities to seek returns with lesser 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 of less than 1%. 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).
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 stock is selling below its 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 Equitable Holdings (4.2%), Popular (4.2%) and Jones Lang LaSalle (3.5%) as of April 30, 2025.
TGVOX has three-year and five-year annualized returns of 13.2% and 16.7%, respectively. TGVOX has an annual expense ratio of 0.85%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Vanguard Whitehall Funds, Selected Value Fund invests most of its net assets in mid-cap domestic companies, which, according to the advisor, are undervalued. VASVX advisors consider a stock as undervalued if it is out of investors’ favor, trading at a price below average in relation to measures estimated, such as earnings and book value, and has an above-average dividend yield.
Richard L. Greenberg has been the lead manager of VASVX since Feb. 25, 2005. Most of the fund’s investments were in companies like Aercap Holdings (3.5%), Corebridge Financial (1.9%) and Baxter International (1.9%) as of April 30, 2025.
VASVX has three-year and five-year annualized returns of 11.6% and 16.2%, respectively. VASVX has an annual expense ratio of 0.36%.
T. Rowe Price Mid-cap Value Fund invests most of its assets, along with borrowings, if any, in equity securities of mid-cap companies. TRMCX advisors generally invest in issues with value characteristics.
Vincent Michael DeAugustino has been the lead manager of TRMCX since May 1, 2022. Most of the fund’s exposure was in companies like Kenvue (2.2%), Zimmer Biomet Holdings (2.1%) and Corning (2.1%) as of March 31, 2025.
TRMCX has three-year and five-year annualized returns of 11.2% and 14.2%, respectively. The annual expense ratio of TRMCX is 0.79%.
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