Some years, it hardly seems to matter whether you invest in growth or value strategies – all stocks move up together, or all stocks move down together. But in 2017, strategy has mattered in a big way. Mutual funds that invest in large, undervalued companies have returned a respectable 10.8% year-to-date on average. But funds that invest in large, growing companies have returned a whopping 24.4%.
It’s an impressive performance gap, but it’s likely not a sustainable one. That’s because much of the gains in large-cap growth funds can be attributed to the five stocks that make up the “FAANG” acronym: Facebook (FB), Amazon.com (AMZN), Apple (AAPL), Netflix (NFLX) and Google parent Alphabet (GOOGL). After posting heroic average returns of 48.2% so far this year, those stocks now trade at a whopping 58.7 times next year’s earnings estimates, on average. It’s hard to picture them delivering another bang-up year from such high valuations.
Instead, we suggest investors refocus their attention on bargain-hunting. We’ve profiled the five top-performing no-load mutual funds that invest in large, undervalued shares, as ranked by five-year performance. Each fund boasts stellar management and a solid long-term track record.
If the market wakes up one morning and decides it’s no longer in love with growth, these five value funds should benefit.
SEE ALSO: 25 Best Low-Fee Mutual Funds
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Date — November 20, 2017 5:00 am
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