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3 Midcap Funds You Can Take to the Bank

These funds offer some financial oomph at just the right size

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Vanguard Selected Value

Vanguard mutual funds 401(k)Vanguard Selected Value (VASVX) remains a compelling choice with an excellent pedigree. This fund employs two sub-advisers, and it is an arrangement that seems to be working out well.

Most of the fund’s assets are managed by James Barrow and Mark Giambrone of Barrow, Hanley, Mewhinney & Strauss LLC. The firm of Donald Smith & Co. handles a lesser portion of the fund’s substantial $6.1 billion in assets.

While there are drawbacks to the multi-manager approach, it is hard to argue with the results here. During the past year, the fund is up a substantial 36% and has gained 12.2% annually during the past five years.

Even with two managers, this fund only owns 66 stocks — so this is very much a concentrated portfolio. A full 27% of the fund is invested in financial services stocks, though many of its top holdings are outside of that sphere. Recent top weights go to XL Group PLC (XL), Royal Caribbean Cruises (RCL), Hanesbrands (HBI), Omnicare (OCR) and Pentair (PNR).

Banks may not be popular with depositors right now, but the right funds focused on the financial services sector may continue to enrich investors as the recovery in this industry marches forward.

Expenses are a mere 0.38%, and turnover of just 18% also helps keep the fund’s costs down.

As of this writing, Bill Wysor did not hold a position in any of the aforementioned securities.

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