The top five holdings of this fund are: WEC Energy Group Inc (WEC, 1.38% of assets); Eversource Energy (ES, 1.30%); Carrier Global Corp Ordinary Shares (CARR, 1.26%); American Water Works Co Inc (AWK, 1.19%); and Motorola Solutions Inc (MSI, 1.17%). The fund has a current annual dividend yield of 2.85%, paid quarterly.
Vanguard Mid-Cap Value Index Fund ETF Shares (VOE)
From Dow Theory Forecasts
Conventional wisdom says to buy funds posting strong returns in top performing categories. While investing in today’s winners can translate to strong returns, the strategy can get crowded when investors chase performance and pile in. Importantly, the crowd isn’t always right.
Sometimes it pays to do the opposite of what the crowd is doing. Betting on out-of-favor funds, dubbed contrarian investing, can also translate to strong returns. To be sure, the strategy often requires a strong stomach and patience. But contrarian investors may find that one man’s trash is another man’s treasure. Ultimately, a key to successful long-term fund investing is to consider different approaches.
Down 2.7% in 2020, Vanguard Mid-Cap Value Index Fund ETF Shares is an attractive rebound pick. A component of our recommended portfolios, the ETF favors consumer discretionary (18% of assets), financials (16%), and utilities (13%). It holds 207 stocks, with the 10 largest positions accounting for 12% of the fund.
Over the past 10 years, the ETF has posted an impressive 10.6% annualized return, ranking it among the top 8% of its peer group. The fund has generated positive returns in seven of the last 10 years, including a 28% gain in 2019. Vanguard Midcap Value charges a modest 0.07% expense ratio, well below the category average of 1.09%.
Richard Moroney, CFA, Dow Theory Forecasts, dowtheory.com, 800-233-5922, November 16, 2020