Best and Worst ‘Value’ Stock Funds in the Quarter
Most value-oriented stock mutual funds sustained losses in the third quarter as the market overall stumbled badly. But the respect Wall Street rediscovered for value-stock pickers in the spring of 2000 has continued to carry value funds in 2001.
Among Morningstar Inc.’s broad categories of stock funds, value funds have held up far better than growth funds this year.
Value can mean different things to different portfolio managers, but in general value managers focus on stocks that are selling for relatively low prices compared with earnings, net worth or dividends--or all of those yardsticks.
True value investing is the antithesis of the growth-oriented investing that was the rage on Wall Street in the late-1990s--the willingness to pay any price for dot-com stocks in that era, for instance.
As growth stocks and growth funds rocketed in 1999 and early 2000, value stocks and funds languished. But since the technology stock meltdown began in March 2000, many value stocks have become market darlings.
How long value will continue to outperform growth is anyone’s guess, market pros say. But some argue that the devastation suffered by growth investors is likely to keep many in a more cautious, value-oriented mode for some time to come.
Shown below are the biggest gainers and biggest losers among large-cap, mid-cap and small-cap value funds in the third quarter, as compiled by Morningstar.
The quarter’s performance may not be a reliable indicator of which value funds are poised to do best over the next year, but the data may at least provide value-fund shoppers with more information by which to evaluate potential choices.
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Large-Cap Value Funds
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Mid-Cap Value Funds
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Small-Cap Value Funds
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