Value investing is a time-tested strategy, while mid-cap stocks can help add diversification to a stock portfolio. For investors looking to combine these two qualities, we’ve highlighted funds with proven track records.
To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. Both names that passed the screen were actively managed.
Mid-Cap Value Funds Performance
- Hotchkis & Wiley Value Opportunities Fund HWAZX
- John Hancock Funds Disciplined Value Mid Cap Fund JVMRX
Over the last 12 months, mid-cap value funds have returned 7.03%. On an annualized rate, mid-cap value funds have returned 10.82% over the last three years and gained 13.26% over the last five years. That compares with the Morningstar US Market Index, which has returned 11.03% over the last 12 months, gained 19.08% per year over the last three years, and gained 15.11% per year over the last five years.
What Are Mid-Cap Value Funds?
Some mid-cap value portfolios focus on medium-size companies while others land here because they own a mix of small-, mid-, and large-cap stocks. All look for US stocks that are less expensive or growing more slowly than the market. The US mid-cap range for market capitalization typically falls between $1 billion-$8 billion and represents 20% of the total capitalization of the US equity market. Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow).
Screening for the Top-Performing Mid-Cap Value Funds
To find the best mid-cap value funds, we looked at returns data from the past one, three, and five years using data in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 33% of the category using their lowest-cost primary share classes for those periods. We also filtered for funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left two funds.
Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.
Hotchkis & Wiley Value Opportunities Fund
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★★★
Over the past 12 months, the $706 million fund has gained 13.23%, while the average fund in its category is up 7.03%. The Hotchkis & Wiley fund, launched in September 2019, has climbed 18.11% over the past three years and 19.69% over the past five.
“Hotchkis & Wiley Value Opportunities reflects the best of the firm’s resources and distinctive value approach. This strategy has skilled investors at the helm. Lead manager David Green and firm executive chairman George Davis have led this strategy since the US-domiciled mutual fund’s late-2002 inception. Green draws upon a diligent 24-member strong investment team.
“While it shares the firm’s focus on buying companies undergoing difficulties that can return to normal earnings, it has the flexibility to invest across the capital structure and market-cap spectrum, with valuations driving decisions. It has primarily owned equities in recent years but invested as much as 12% of assets in bonds in the past. It may also selectively invest in non-US stocks, special situations such as risk arbitrage trades, and buy stakes in private firms. The 40- to 70-stock portfolio is consistent with the firm’s deep-value identity, and the team often leans into unloved sectors, industries, or companies. But true to its name, Green can opportunistically allocate to nontraditional value sectors when the moment presents. For instance, he scooped up additional shares in Microsoft during 2022’s selloff. It’s this adept execution that’s underpinned the strategy’s success.
“Investors who can weather the volatility have been handsomely rewarded over the long haul, but it’s been an up-and-down ride at times. While this strategy is often more volatile than relevant peers and not a great down-market performer, it has made up for this in market rallies to offset the excess risk. Through February 2025, since the mutual fund’s year-end 2002 inception, as well as over the trailing 10 years, its risk-adjusted returns have outpaced those of its prospectus Russell 3000 Value Index benchmark.”
—Chris Tate, senior analyst
John Hancock Funds Disciplined Value Mid Cap Fund
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★
Over the past 12 months, the $21.5 billion John Hancock Funds Disciplined Value Mid Cap Fund rose 8.94%, while the average fund in its category rose 7.03%. The John Hancock fund, launched in September 2011, has climbed 13.71% over the past three years and 14.42% over the past five.
“A strong team with a well-orchestrated succession plan and a reliable approach make Boston Partners Mid Cap Value strategy, which includes a separately managed account and mutual funds with John Hancock and Robeco, an excellent choice.
“Steven Pollack has guided this strategy to tremendous results for nearly 25 years … At the start of 2023, the firm promoted analyst Tim Collard to assistant manager. Collard joined the firm in 2018, and he quickly distinguished himself as one of the top analysts. Over the past 2.5 years, Collard has gradually taken on more responsibilities, and his close collaboration with Pollack sets the strategy up for continued success. Additionally, the managers are backed by Boston Partners’ talented and stable central analyst team of 22 fundamental analysts and eight quantitative analysts.
“They look for companies with attractive valuations, strong fundamentals, and positive business momentum. An initial quantitative screen identifies stocks with these characteristics, providing analysts with a solid starting point for conducting fundamental research. Analysts then dig into each pillar, seeking firms with strong profit margin trends, competitive returns on invested capital, and positive earnings revisions. Analysts and managers debate buy-and-sell decisions for each portfolio holding, making for a collaborative and thorough process. This disciplined framework results in a distinctive yet diversified portfolio, with Pollack and Collard unafraid to overweight sectors where they see the most compelling opportunities.
“Under Pollack’s watch, the strategy has a great record. From his July 2001 start through April 2025, the US mutual fund’s I shares’ 10.2% annualized return topped the Russell Midcap Value Index and the average mid-value Morningstar Category peer by 1.2 and 2.3 percentage points, respectively. Pollack will be a hard act to follow, but his continued presence and mentoring of Collard ensure this strategy’s appeal will endure.”
—Tony Thorn, analyst
This article was generated with the help of automation and reviewed by Morningstar editors.
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