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The Best Value Funds | Morningstar

In 2024, the trend of growth stocks outperforming value stocks continues, with the Morningstar US Growth Index surpassing the Morningstar US Value Index by more than 6 percentage points. This ongoing disparity raises the question: Should investors consider buying value stock funds at this time?

For investors with core stock mutual funds or ETFs that already include exposure to value stocks, additional investments in this area may not be necessary as they are already diversified. However, for those who believe in the potential of value stocks and wish to adjust their portfolios accordingly, there are various value stock ETFs and mutual funds available. DailyBubble suggests looking into funds in the US large-value, mid-value, or small-value Morningstar Categories that have received a top Morningstar Medalist Rating of Gold, as these funds are expected to perform well over a full market cycle.

Some of the best value ETFs and mutual funds to consider in 2024, based on their Gold Medalist Ratings, include American Funds American Mutual, Diamond Hill Large Cap, and Vanguard High Dividend Yield Index/ETF, among others.

Value funds typically focus on purchasing undervalued stocks and holding onto them until they reach fair value. However, the strategies employed by value stock managers can vary greatly, from deep-value approaches to those that blend low valuations with quality screens. It is important for investors to conduct thorough research before investing in value funds, as different approaches can result in varying performance and risk profiles.

In conclusion, while top-rated value stock funds are expected to outperform over time, investors may want to explore beyond the recommended list to find value funds that align with their specific preferences. DailyBubble suggests using tools like the Morningstar Investor screener to discover value ETFs and mutual funds that cater to individual investment criteria.

Ultimately, the decision to invest in value stocks should be based on individual financial goals and risk tolerance, with a keen eye on long-term performance potential.

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