Value Added
Here's a midcap fund that's more than just middle of the road.
No matter how you slice it, buying low and selling high is how
the big guns on Wall Street make their money. When it comes to
mutual funds, the same is true— if the fund has a value
bent.
David Wallack, portfolio manager of the T. Rowe Price Mid-Cap
Value Fund (TRMCX), understands market challenges. His grasp of
downside risk— upside potential— rewarded fund
shareholders: Over the past three years, ending July 31, the
fund's average annual total return was 13.09 percent, according
to Lipper. In addition, it's garnered four out of five possible
Lipper Leaders checks, scoring it tops in total return, consistent
returns, preservation of capital and expenses.
Wallack defines midcap companies as those having a market
capitalization of between $1 billion and $12 billion, and he
typically keeps between 80 and 120 stocks in the fund's
portfolio. Using a bottom-up approach to investing, one of this
year's new buys was Kmart; one of its discards, Tupperware.
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As with all equity funds, there are risks to investing in the T.
Rowe Price Mid-Cap Value Fund. Earnings on midcap stocks can
fluctuate more than those on large-caps, and value investing has
its cycles. "The biggest risk is that we tend to lag in an
aggressive bull market," says Wallack. "But over multiple
years, you have to keep what you earn to have decent returns. And
that's what I try to do."
Dian Vujovich is an author, syndicated columnist and
publisher of fund investing site www.fundfreebies.com.