The manager of Vanguard Selected Value, which invests in undervalued midsize companies, says this is a great environment for his fund. Valuations between traditional growth and value companies have been compressed, says Jim Barrow. This means that he can find quality, growing companies at value prices. "As a value manager, we're able to pick up former growth companies at low multiples," he says.
Selected Value has returned a solid 21% over the past year through April 5. But Barrow, co-founder of Dallas-based sub-adviser Barrow, Hanley, Mewhinne & yStrauss, thinks performance could have been even better had he not underweighted or ignored completely four sectors that are prominent in most mid-cap indexes: real estate investment trusts, utilities, brokerages and commodity-related stocks.
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