3 Standouts in the Struggling Large-Value Category
Susan Dziubinski: I'm Susan Dziubinski from Morningstar.com. Large value funds are having a tough time. They are lagging all other U.S. style-based equity categories this year and for most trailing periods. Simply put, growth strategies have dominated for a large part of the last decade.
As recent results show, investing in value requires patience. However, value stocks have historically outpaced their growth counterparts over the long-term. With that in mind, we asked our analysts for some of their favorite large-cap funds practicing value strategies.
Linda Abu Mushrefova: Despite recent underperformance, Diamond Hill Large Cap remains an attractive choice for investors. It's backed by an experienced manager in Chuck Bath, who has been running the fund since 2002, and he's further supported by Austin Hawley as a comanager. Their team uses an intrinsic value philosophy to model names out on a five-year basis. Their process leads them to be contrarian in nature and can result in periods of underperformance relative to their peers.
For example, over the last couple of years, the team has consistently underweighted the technology sector, which has outperformed the market. This has resulted in poor performance relative to peers in the large-value category, as well as relative to their benchmark, the Russell 1000 Index. An added benefit to investors is this fund's attractive price tag. Over a full market cycle, we expect this fund to perform well relative to its peers, as well as its index.
Andrew Daniels: Gold rated Dodge & Cox stock is a great long-term option for its decisive value approach, talented investment team, and low fees. The fund is run by one of the deepest management teams in the asset management industry. The nine-member investment committee that oversees the fund averages 24 years of firm tenure, and they are supported by about 60 analysts. The team looks for U.S. stocks that look cheap on a range of valuation multiples. They oftentimes take advantage of bad news or a bad economic environment to buy fundamentally strong businesses. They're also long-term-oriented, so turnover remains quite low. Overall, it remains a very solid long-term option.
Alec Lucas: For investors, who want a reliable, long-term large-value option, American Funds Washington Mutual is a great choice. It has strict eligibility requirements for its investments, which date to the 1950s, and it has been a fund that's done very well since its inception around that time. The fund currently has seven very experienced managers. They keep the fund fully invested, which differentiates itself from some other American Funds siblings. It focuses on dividend-paying stocks, primarily in North America, and it's a kind of fund that you would like to own in turbulent equity market conditions. It's a reliable option for conservative investors.