3 Large-Value Picks to Help With Diversification
Funds like Dodge & Cox Stock, Vanguard Equity-Income, and LSV Value Equity can help when high-flying large-growth stocks inevitably pull back.
Katie Reichart: Of the nine Morningstar Style Box categories, large value has been the worst performer during the trailing decade through July. It's particularly lagged relative to large growth, the top performing style box category over that same 10-year period. Large growth has done so well thanks to the success of some technology- and consumer-related stocks that most value funds don't own, including Amazon and Netflix.
Large value has looked out of favor in the past, especially during the late 1990s tech boom. But for long-term investors, large value will continue to play an important role in a diversified portfolio.
Some of Morningstar's top large-value picks include Gold-rated Dodge & Cox Stock, which has low expenses and has stuck to its value approach through thick and thin, though it comes with some volatility. Silver-rated Vanguard Equity-Income takes a traditional yield-oriented approach, holding up fairly well in market pullbacks and benefiting from low fees. LSV Value Equity, rated Silver, uses a disciplined quantitative approach to find out-of-favor stocks, proving more patient than many quant funds with its relatively low turnover.
These large-value funds can help diversify an investor's portfolio, especially when high-flying large growth stocks inevitably pull back.
Katie Rushkewicz Reichart does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.