Heartland Mid Cap Value Fund

  • Overview
  • Materials
  • Portfolio Management Team
  • Performance
  • Commentary
  • Portfolio Composition
  • Risk Analysis
  • Distributions

HRMDX, HNMDX

Overview

Investment Focus

Seeks long-term appreciation by investing in mid-cap, dividend paying companies

Distinguishing Characteristics

  • Invests 80% of its assets in mid-cap securities with the market cap range defined by the Russell Midcap® Index 
  • Designed for investors who seek a portfolio of medium-sized, dividend paying companies
  • Benchmarked to the Russell Midcap® Value Index
  • Typically holds 30-60 stocks
  • Inception date: 2014

Investment Process

All stocks are evaluated based on our proprietary, consistent, and time-tested 10 Principles of Value Investing™. These criteria are central to Heartland’s value investing philosophy and provide a framework for evaluating securities.

The Investment Team applies a bottom-up research approach, combining traditional fundamental analysis and meetings with more than 1,000 company management teams in a typical year. The 10 Principles™ are designed to help the Team assess a company's valuation, but also focus on metrics associated with financial soundness, management team strength, and future outlook.

Learn more about our process

  • Basics
  • Minimums
  • Fees
  • Expenses

9/30/2018

Benchmark: Russell Midcap® Value Index

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Investor Class Institutional Class
Ticker HRMDXHNMDX
CUSIP 422352815422352799
Inception Date 10/31/201410/31/2014
Assets $6 million$3 million

Investor
Class ($)
Institutional
Class ($)
Initial Investment1,000500,000
IRA Initial Investment500500,000
Subsequent Investments100100

Shareholder Fees

Paid directly from total investment

  Investor
Class (%)
Institutional
Class (%)
Load 0 0
Sales Charge 0 0
Exchange Fee 0 0
Redemption Fee* 2 2


*If shares are redeemed or exchanged within 10 days of purchase

Annual Fund Operating Expenses

Paid annually as a percentage of total investment value*

  Investor
Class (%)
Institutional
Class (%)
Management Fee 0.75 0.75
12b-1 Distribution Fee 0.25 0.00
Other Expenses 1.50 1.70
Total Annual Fund Operating Expenses 2.50 2.45
Fee Waiver and/or Expense Reimbursement -1.25 -1.46
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement** 1.25 0.99


*As stated in the prospectus (pdf) dated 5/1/2018
**Pursuant to an operating expense limitation agreement between Heartland Advisors and Heartland Group, Inc., on behalf of the Fund, Heartland Advisors has agreed to waive its management fees and/or pay expenses of the Fund to ensure that the Fund’s total annual fund operating expenses (excluding front-end or contingent deferred sales loads, taxes, leverage, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, dividends or interest expenses on short positions, acquired fund fees and expenses, or extraordinary expenses) do not exceed 1.25% of the Fund’s average daily net assets for the Investor Class Shares and 0.99% for the Institutional Class Shares through at least May 1, 2019, and subject to annual re-approval of the agreement by the Board of Directors, thereafter. This operating expense limitation agreement can be terminated only by, or with the consent of, the Board of Directors.

Overall Morningstar Rating™ in Mid-Cap Value Category

  • Investor Class
  • Institutional Class
4Overall Morningstar Rating™ as of 11/30/2018, out of 364 Mid-Cap Value funds, based on risk-adjusted performance for investor class shares
4Overall Morningstar Rating™ as of 11/30/2018, out of 364 Mid-Cap Value funds, based on risk-adjusted performance for institutional class shares

 

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Video
4/18 - 2:39

A Look at Our Mid Cap Value Strategy

The Portfolio Management Team provides an overview.

Portfolio Management Team

Heartland Mid Cap Value Fund Portfolio Management Team

34 years of industry experience
23 years of experience at Heartland

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Will Nasgovitz

Nasgovitz is CEO and Portfolio Manager of the Select Value and Mid Cap Value Funds and their corresponding separately managed account strategies. He also is CEO of Heartland Funds. He has 18 years of industry experience, 14 at Heartland.

Colin McWey

McWey, CFA, is Vice President and Portfolio Manager of the Select Value and Mid Cap Value Funds and their corresponding separately managed account strategies. He has 16 years of industry experience, 9 at Heartland.

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News & Investing Perspectives

Infographic
12/18
Mid Cap Value Fund Inforgraphic page

Mighty Mid Caps by the Numbers

Six points making the case for mid caps.

Video
10/18 - 2:32
Heartland Mid Cap Value Fund Portfolio Manager Colin McWey

Dipping into the Value Well with 2 Buckets

The scenarios we look for when evaluating value and deep value stocks in the mid-cap space.

Water & Wells
10/19/18
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Yield: Pumping the Brakes on Growth Stocks

Why yields on the 10-year Treasury may be welcome news to value investors.

Heartland in the News
10/5/2018
Heartland Advisors Value Investing Mid Cap Value Management Team

Mid Cap Value Fund a 'Category King'

The Wall Street Journal recognized the Fund’s performance.

Heartland in the News
8/27/18
Heartland Advisors Value Investing Portfolio Managers Will Nasgovitz and Colin McWey

Heartland Profiled as Citywire’s Boutique of the Week

An inside look at the Firm in an interview featuring CEO and Portfolio Manager Will Nasgovitz and Portfolio Manager Colin McWey, CFA.

Water & Wells
8/14/18
Heartland Advisors value investing Portfolio Manager Will Nasgovitz

Tripped up by a Low Hurdle

How low interest rates have led to a surge of money losing companies, and what that may mean as interest rates move higher.

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Heartland in the News
6/27/18

Kick-Starting a Trade War?

As tweets, tariffs, and trade wars dominate news headlines—Portfolio Manager Colin McWey, CFA, shares his perspective on the uncertainty created for a well-known motorcycle manufacturer.

Heartland in the News
6/13/18

No Longer Vertically Challenged

Portfolio Manager Colin McWey, CFA, shares how the recent approval of a “vertical merger” between two industry giants could impact players in Health Care.

PM Perspective
5/18

Cash Flow: An Equalizing Force in Analysis

Cash flow helps us evaluate opportunities on an apples to apples basis regardless of industry or debt.

Heartland in the News
5/22/18

Will a Surge in Oil Prices Fuel Opportunities in Energy?

A potential upswing in the Energy sector as oil prices continue to rise. Portfolio Manager Colin McWey, CFA, weighs in.

Heartland in the News
5/10/18

Opportunities Arriving by Sea and Sky?

Portfolio Managers Will Nasgovitz and Colin McWey, CFA share their stock picks for the long days of summer.

PM Perspective
4/18

Why Catalysts and Context Matter

The difference between an unloved laggard and an attractive investment opportunity often begins with perception. Here is a look at internal catalysts and their importance in changing investors’ views and company results.

Heartland in the News
2/16/18

Why Contrarians are Feeling the Energy

The sector has fallen more than the broader market, which means potential value opportunities for discerning investors. Portfolio Manager Colin McWey, CFA, weighs in.

Water & Wells
2/6/18

Normal is Dead, Long Live Normal!

The return of volatility could provide opportunities for active investors going forward.

Heartland in the News
1/25/18

Heartland CEO: Record Market Highs Haven’t Dried the River of Value

Will Nasgovitz was interviewed about the current environment for value investors.

Water & Wells
1/23/18

Value—it’s the Real Thing

Why the value versus growth debate is about more than the investment flavor of the day.

Performance

Average Annual Total Returns
  • Month-End
  • Quarter-End
  • Annual
11/30/2018

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Mid Cap Value
Investor Class
7.40----10.463.521.92-3.48
Mid Cap Value
Institutional Class
7.68----10.733.782.17-3.47
Russell Midcap® Value6.66----8.90-0.79-2.00-4.98
*Not annualized
9/30/2018

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Mid Cap Value
Investor Class
8.71----15.2112.725.593.94
Mid Cap Value
Institutional Class
9.00----15.5112.985.844.02
Russell Midcap® Value8.36----13.098.813.133.30
*Not annualized
  2017 (%) 2016 (%) 2015 (%) 2014* (%)
Mid Cap Value Investor Class 8.11 28.67 -7.08 1.61
Mid Cap Value Institutional Class 8.37 28.97 -6.89 1.73
Russell Midcap® Value 13.34 20.00 -4.78 2.54

*Performance is from 10/31/2014 to 12/31/2014 and is not annualized

Growth of a Hypothetical $10,000 Investment

9/30/2018

Since inception of the investor class, 10/31/2014 to 9/30/2018
Chart represents a hypothetical example of an investment in the Mid Cap Value Fund representing historical returns

Heartland Mid Cap Value Fund Growth of 10000 Chart

Morningstar Ratings™ in Mid-Cap Value Category
  • Investor Class
  • Institutional Class
Morningstar Ratings TM
11/30/2018
RatingTotal Funds
Overall4364
10-Year--
5-Year--
3-Year4364
Morningstar Ratings TM
11/30/2018
RatingTotal Funds
Overall4364
10-Year--
5-Year--
3-Year4364

Past performance does not guarantee future results. Performance represents past performance; current returns may be lower or higher. Performance information for institutional class shares of Funds that existed prior to their initial public offering is based on the performance of investor class shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. All returns reflect reinvested dividends and capital gains distributions, but do not reflect the deduction of taxes that an investor would pay on distributions or redemptions. Subject to certain exceptions, shares of a Fund redeemed or exchanged within 10 days of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return.

In the prospectus (pdf) dated 5/1/2018, the Net Fund Operating Expenses for the investor and institutional classes of the Mid Cap Value Fund are 1.25% and 0.99%, respectively. The Advisor has contractually agreed to waive its management fees and/or reimburse expenses of the Fund to ensure that Net Fund Operating Expenses for the Fund do not exceed 1.25% of the Fund’s average net assets for the investor class shares and 0.99% for the institutional class shares, through at least 5/1/2019, and subject thereafter to annual reapproval of the agreement by the Board of Directors. Without such waiver and/or reimbursements, the Gross Fund Operating Expenses would be 2.50% for the investor class shares and 2.45% for the institutional class shares.

The inception date for the Mid Cap Value Fund is 10/31/2014 for the investor and institutional class.

Heartland Advisors Value Investing Team IconHistorical NAVs

Contact a Relationship Manager for historical NAVs.

Historical NAVs also are available from third party websites, such as Bloomberg, Yahoo! Finance, or Google Finance.

Commentary

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9/30/18
Heartland Mid Cap Value Fund Portfolio Manager Commentary

Heartland Mid Cap Value Fund 3Q18 Portfolio Manager Commentary

Strong employment figures, robust manufacturing readings, and bullish consumer sentiment reignited a fear of missing out on the part of investors.

Portfolio Composition

Characteristics

9/30/2018

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CharacteristicMid Cap ValueRussell Midcap® Value
Holdings 46-
Assets $9 million-
Assets in Dividend-Paying Companies 81.2% -
Median Market Cap $9.4 billion$8.0 billion
Weighted Average Market Cap $13.5 billion$15.0 billion
Trailing 1-Year Turnover 51.7% -

Capitalization Breakdown
9/30/2018
Cap Range% of Equities in Portfolio
>$15 billion34.3
$2.5-15 billion64.3
$300 million-2.5 billion1.4
<$300 million0.0

The above breakdown does not include short-term investments.

Valuation Analysis
Equity securities only, weighted harmonic average unless otherwise noted

9/30/2018

Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors, Inc.
*Weighted average

Heartland Mid Cap Value Fund valuation bar charts 1Heartland Mid Cap Value Fund Valuation Analysis Charts 2

Sector Allocation

9/30/2018

Source: FactSet Research Systems Inc., and Russell Investment Group

Heartland Mid Cap Value Fund Sector Charts 1Heartland Mid Cap Value Fund Sector Charts 2

Top 10 Holdings
9/30/2018

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TickerHolding% of Net AssetsIndustry
FEFirstEnergy Corp.4.81Electric Utilities
EXCExelon Corporation4.71Electric Utilities
BPOPPopular, Inc.4.13Banks
DGXQuest Diagnostics, Inc.3.95Health Care Providers & Services
EQCEquity Commonwealth3.94Equity Real Estate Investment Trusts (REITs)
AVTAvnet, Inc.3.10Electronic Equipment Instruments & Components
FLSFlowserve Corp.2.97Machinery
FTITechnipFMC PLC2.84Energy Equipment & Services
NOVNational Oilwell Varco, Inc.2.62Energy Equipment & Services
CNACNA Financial Corp.2.50Insurance
% of Total Net Assets35.57

Sector-Level Attribution

9/30/2018

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Security-Level Attribution & Contribution

9/30/2018

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3-Year Risk Analysis

  • Investor Class
  • Institutional Class
9/30/2018

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Mid Cap Value1.5710.951.040.461.32111.51101.7582.7392.41
Russell Midcap® Value0.009.621.000.001.28100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group, and Standard & Poor's
Alpha, beta, and information ratio are versus the Russell Midcap® Value. Depiction is for investor class shares.

9/30/2018

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Mid Cap Value1.8710.931.030.531.35112.33100.0082.8092.41
Russell Midcap® Value0.009.621.000.001.28100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group, and Standard & Poor's
Alpha, beta, and information ratio are versus the Russell Midcap® Value. Depiction is for institutional class shares.

Distributions

  • Investor Class
  • Institutional Class
Record
Date
Payable
Date
             Ordinary Dividend
($/share)
Short-Term Capital
Gain ($/share)
Long-Term Capital
Gain ($/share)
12/27/2017 12/28/2017   0.09048 0.19499 0.50601
12/28/2016 12/29/2016   0.08174 - -
12/28/2015 12/29/2015   0.06589 0.09823 0.00205
12/29/2014 12/30/2014   0.03173 - -

 

Record
Date
Payable
Date
             Ordinary Dividend
($/share)
Short-Term Capital
Gain ($/share)
Long-Term Capital
Gain ($/share)
12/27/2017 12/28/2017   0.12172 0.19499 0.50601
12/28/2016 12/29/2016   0.08442 - -
12/28/2015 12/29/2015   0.12479 0.09823 0.00205
12/29/2014 12/30/2014   0.02329 - -

 

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©2018 Heartland Advisors | 789 N. Water Street, Suite 500, Milwaukee, WI 53202 | Business Office: 414-347-7777 | Financial Professionals: 888-505-5180 | Individual Investors: 800-432-7856

$6.4 average annual sales is represented by the Russell Midcap® Value Index as of 10/31/2018. 

2.9X profit margins compares the Russell Midcap® Value Index to Russell 2000® Value Index as of 10/31/2018. 

The Mid Cap Value Fund invests in a smaller number of stocks (generally 30 to 60) than the average mutual fund. The performance of these holdings generally will increase the volatility of the Fund’s returns. The Fund also invests in mid–sized companies on a value basis. Mid-sized securities generally are more volatile and less liquid than those of larger companies. There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Directors may determine to liquidate the Fund.

Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

There is no assurance that dividend-paying stocks will mitigate volatility.

Portfolio holdings are subject to change without notice. Current and future portfolio holdings are subject to risk.

Portfolio holdings exclude cash, cash equivalents, options, and futures.

Certain security valuations and forward estimates are based on Heartland Advisors' calculations. Certain outliers may be excluded. Any forecasts may not prove to be true.

Information about Morningstar Ratings™ are ©2018 Morningstar, Inc. All rights reserved. The information contained herein is (1) proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed, and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

As of 11/30/2018 Morningstar Ratings™: The Heartland Mid Cap Value Fund investor class was rated against -, -, and 364 U.S.-domiciled Mid-Cap Value funds over the 10-, 5-, and 3-year periods and received -, -, and 4 stars, respectively.
As of 11/30/2018 Morningstar Ratings™: The Heartland Mid Cap Value Fund institutional class was rated against -, -, and 364 U.S.-domiciled Mid-Cap Value funds over the 10-, 5-, and 3-year periods and received -, -, and 4 stars, respectively.

Economic predictions are based on estimates and are subject to change.

Heartland’s investing glossary provides definitions for several terms used on this page.

Unless noted with an asterisk (*), the above individuals are registered representatives of ALPS Distributors, Inc.

CFA® is a registered trademark owned by the CFA Institute.

The Heartland Funds are distributed by ALPS Distributors, Inc.

Separately managed accounts and related investment advisory services are provided by Heartland Advisors, Inc., a federally registered investment advisor. ALPS Distributors, Inc., is not affiliated with Heartland Advisors, Inc.

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