3 Great Value Funds for 2023
These solid funds like cheap stocks.
Russel Kinnel: Value investors are a different breed. They’d rather have cheap stocks than trendy fast-growing stocks. Studies suggest that value actually usually beats growth in the long run because growth companies have so much good news priced in, whereas value companies merely need to rebound to their old levels of profitability to earn a solid return for investors. So, don’t worry about the buzz and invest in one of these solid value funds. I’ve picked one for each market-cap level.
3 Great Value Funds for 2023
These funds earn Morningstar Analyst Ratings of Gold, Silver, and Bronze.
In large value, I picked Vanguard Windsor. David Palmer of Wellington runs 70% of the fund, and a trio of managers from Pzena runs the remaining 30%. Palmer of Wellington looks for cheap shares of companies that he thinks can rebound to their long-term earnings levels.
Pzena looks for deeper-value stocks. That’s a volatile but potentially rewarding strategy. Together the two subadvisors have consistently outperformed their peers and benchmark.
Fidelity Low-Priced Stock is an appealing investment even though the legendary investor Joel Tillinghast is set to retire at the end of 2023. Comanagers Sam Chamovitz and Morgen Peck are seasoned managers who will take the helm when Tillinghast departs, so we still have confidence in the fund even after Tillinghast leaves. Both new managers have good track records on their own and aim to keep buying strong companies with solid balance sheets and modest valuations, just like Joel Tillinghast did.
LSV Small Cap Value is a horse of a different color. It’s a quantitative fund run by seasoned managers Josef Lakonishok and Menno Vermeulen. They have a strong track record, and I like that the fund charges a modest 1.08%. The strategy emphasizes low prices, momentum, and a bunch of other value factors. Just keep in mind that this is a fairly deep-value strategy, so it’s going to have big year-to-year swings in returns, Because of that, I think it works best as a long-term investment of 10 years or more.
Watch “3 Great Growth Funds for 2023″ for more from Russ Kinnel.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.