First, we select the top trending category from more than 200 categories listed on MutualFunds.com based on the percentage increase in monthly viewership. From the top trending category, we select the top three funds with the highest one-year trailing total returns. To ensure the quality and staying power of funds, we only look at mutual funds with a minimum of $250 million in assets and a track record of at least one year. We also remove mutual funds that are closed to new investors and not available for investment outside registered accounts, such as retirement or 529 accounts.
In this week’s edition, we analyze the top three U.S. Value Equity Funds. These funds are focused on companies that are trading at an attractive valuation compared to their peers and/or the overall market.
Growth stocks tend to perform well during low interest rate environments because they leverage low-cost capital to grow distant cash flow potential, whereas value stocks tend to perform better during periods of rising interest rates. With inflation concerns on the rise in recent months, value stocks have come into focus and become strong secular performers.
Our breakdown of each fund includes key aspects, such as one-year performance, fund expenses, investment style and management teams, to give you an overview of how these funds hold up against their peers.
Be sure to check out the Value Equity Funds page to find out more about other funds in this category as well.
Trending Funds
1. Royce Opportunity Fund (RYPNX)
The top fund in our list this week is Royce Opportunity Fund (RYPNX). It generated a solid 74% trailing one-year total return with a 1.24% expense ratio.
The actively managed fund’s strategy is to invest in opportunistic situations involving undervalued small- and micro-cap equities. Normally, the fund invests at least 65% of its net assets in equity securities, but it may also invest in other companies that invest in equity securities.
The fund’s Portfolio Manager William Hench was assistant portfolio manager between 2004 and 2013 before being promoted to portfolio manager. Mr. Hench is joined by Robert Kosowsky, CFA, and Suzanne Franks, who have both been with the firm since 2018.
The fund’s portfolio includes 270 securities with about 5% of its portfolio in cash. The three largest holdings include Magnite Inc. (MGNI) at 1.23%, Forterra Inc. (FRTA) at 1.03% and Alpha & Omega Semiconductor Ltd. (AOSL) at 1.01%. The portfolio is concentrated in Industrials (23.44%), Technology (18.91%), Consumer Cyclical (16.42%) and Healthcare (11.87%).
Learn more about different portfolio management concepts here.
2. PIMCO RAE Plus Small a Fund (PCFAX)
The number two fund on our list this week is the PIMCO RAE Plus Small a Fund (PCFAX). The fund delivered a solid 54.20% trailing one-year total return with a 1.28% expense ratio and a 9.87% yield, making it the highest-yielding fund on this week’s list.
The fund’s goal is to exceed the total return of the Russell 2000 Value Index under normal circumstances through exposure to a portfolio of U.S. small-cap companies along with an absolute return-bond alpha strategy. The fund may invest up to 10% of its total assets in preferred stock and have up to 35% exposure to foreign currencies.
The fund is managed by Founder and Chairman of Research Affiliates, Robert Arnott, a sub-advisor to PIMCO, and Managing Director of PMCO and Generalist Portfolio Manager, Mohsen Fahmi,. These two are joined by Christopher Brightman, Jing Yang, Bryan Tsu and Marc Seidner.
The fund’s leveraged portfolio consists of 35.68% equities, 35.17% bonds and 26.39% cash. While the fund’s bonds are concentrated in government bonds and cash equivalents, its equity holdings are concentrated in various PIMCO funds.
Find out about the funds suitable for your portfolio by using our free screener.
3. Vanguard Windsor Fund (VWNDX)
The third place on the list belongs to the Vanguard Windsor™ Fund (VWNDX). The fund generated a robust 29.81% trailing one-year total return with a 0.29% expense ratio, making it the lowest cost fund in the group, and a 1.66% yield.
The actively managed fund’s strategy is to aggressively invest in undervalued mid- to large-cap funds and companies. These companies tend to be out of favor with investors. Fund’s advisors believe that these funds are trading at prices that are below average in relation to their earnings to book value.
The fund is managed by Founder, Managing Principal, Co-Chief Investment Officer and Portfolio Manager Richard Pzena,, who has been with the fund since 2012. Mr. Pzena is joined by Principal and Portfolio Manager Benjamin Silver, CFA, CPA, Principal and Portfolio Manager John Flynn, and Senior Managing Director and Equity Portfolio Manager David Palmer, CFA.
The fund’s portfolio consists of over 120 assets that are primarily concentrated in equities. The largest holdings include Bank of America (BAC) at 2.83%, Comcast Corp. (CMCSA) at 2.23%) and Charles Schwab Corp. (SCHD) at 2.17%. The sectors with the heaviest weight include Financial Services (23.57%), Technology (14.48%) and Healthcare (12.70%).
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The Bottom Line
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Note: Trailing one-year total returns (month-end) as of February 28, 2021.