The 3 Best Value Funds That Actually Earn Their Fees

In a market environment where investors are either buying a narrowing number of quality stocks on the dips or overlooking some potentially oversold winners, investors are smart to look around to find the best value funds.

big money huge 630 isp
Source: ©iStock.com/Enoxh

And just as value stocks are becoming increasingly difficult to find, some of the best value funds are closed to new investors, which leaves only a handful of high-quality value funds you can buy now.

To narrow down your choices among the best value funds even further, you’re going to want to find either good funds that sport low expense ratios, or funds that might have above-average fees but have managers who are worth the added cost.

Using those parameters, here are three of the best value funds that more than earn their fees:

Best Value Funds That Earn Their Fees: T. Rowe Price Value (TRVLX)

The Best Value Funds That Actually Earn Their Fees: T. Rowe Price

Expenses: 0.82%
Minimum Initial Investment: $2,500

You won’t find many value funds with a combination of below-averages expenses and above-average returns, and T. Rowe Price Value (TRVLX) is on the short list for this rare value combo.

The fund manager, Mark S. Finn, has been at the helm of TRVLX since the end of 2009 and has put up outstanding numbers in that time. The five-year annualized return of 15.9% beats more than 90% of large-value category peers and also tops the S&P 500 index for the same period.

The average price-to-earnings ratio for the portfolio was 15.1 as of June 30, 2015, which is significantly below the 16.9 P/E on the Russell 1000 Value Index.

The top sectors include financial services, healthcare and industrials, which encompasses top holdings such as General Electric (GE), Pfizer (PFE), Citigroup (C) and JPMorgan Chase (JPM).

Best Value Funds That Earn Their Fees: Tweedy, Browne Global Value (TBGVX)

The Best Value Funds That Actually Earn Their Fees: Tweedy, BrowneExpenses: 1.36%
Minimum Initial Investment: $2,500

If you are looking for one of the best value funds with a global reach, Tweedy, Browne Global Value (TBGVX) is well worth its above-average expense ratio.

Lead fund managers William H. Browne and John D. Spears have been at the helm of this five-star fund for 22 years, and their experience and stock-picking skills have proven highly valuable to shareholders during their tenure.

The one-, three-, five- and 10-year annualized returns rank well ahead of average for foreign large-value funds and the 15-year return ranks ahead of 95% of category peers.

As of June 30, 2015, the cash allocation was a hefty 22.5%, which shows a patient hand in waiting for the best value stocks to buy.

Top sectors were recently financials, consumer defensive and healthcare, and regional exposure was recently 78.4% greater Europe, 9.9% greater Asia and 11.7% Americas. That leads to top holdings such as Standard Chartered (SCBFF), Roche (RHHBY) and Novartis (NVS).

Best Value Funds That Earn Their Fees: Vanguard Equity Income (VEIPX)

The Best Value Funds That Actually Earn Their Fees: Vanguard

Expenses: 0.29%
Minimum Initial Investment: $3,000

There may not be a better managed value stock fund with this low an expense ratio than Vanguard Equity-Income (VEIPX).

Lead fund manager James P. Stetler has been guiding this five-star value fund to impressive performance since the end of 2003.

The 10-year annualized return of 7.6% beats 93% of large-value stock funds, which returned 5.7%, and it edges out the S&P 500 index return of 7.2% for the period.

One of the greatest values of VEIPX is its history of beating the market averages when stock prices are falling.

Take a look back at how Stetler and the VEIPX management team fared during the peak of the previous bear market, which was in 2008. The fund declined 31%, which is outstanding compared to the 37.6% drop on the S&P 500 and the 37.1% decline on the average large value stock fund.

And in 2011, when the S&P 500 climbed a meek 2.1%, VEIPX jumped 10.6%.

Top holdings recently included Wells Fargo (WFC), Microsoft (MSFT), JPMorgan Chase and Verizon (VZ).

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/09/best-value-funds-earn-fees-trvlx-tbgvx-veipx/.

©2021 InvestorPlace Media, LLC