Many of the top small cap value funds are closed to new investors, and this is an ongoing good news/bad news. Nuveen FSCCX and Wisdom Tree DES are both open and have among the best 3 and 5-year records. Mid cap value is also pretty bare, but Wells Fargo SMCDX has a good track record. ETFs offer more options in PEY, DVY, DON, all of which have out-performed the S&P 400. But, as David says, it depends on what is important to you. Diamond Hill has a great small cap fund, but it is closed.
We use Vanguard Index VIMAX as a core hold, with UMBMX as a concentrated add-on. It has out-performed both midcap blend and value over the last 10 years, mostly it has less downside loss.
For small cap we use SWSSX or VTMSX as a core, with IYSIX in our more aggressive accounts.

"But has acted like a story stock"?
Uhhh ... top 3% of all global funds for the past three, five and ten years. It trailed its peers in 2015 by 1.3% and YTD by 3.5%. Their argument is that they favor firms that generate lots of free cash flow, which they take to be a sign of a sustainable business that can finance its own growth without recourse to borrowing. The market lately has emphatically favored "get big quick" story stocks. The four FANG stocks accounted for all of the S&P 500's gains last year but if you look at Netflix (the "N"), they're trading for $110/share and reporting $0.04 earnings/share. Facebook ("F") reported $0.18/share last year against a share price of $115. They do own Alphabet/Google but not Amazon.
So if "story stocks" are bad and they refuse to own the story stocks, despite their current price momentum, wouldn't that be a good thing?
Puzzled, as is so often the case,
David

Hi, ep1.
A lot depends on what you're looking for, beyond "small and midcap." Some folks like deep value, some seek low-vol, absolute value or concentrated portfolio. I ran a quick screen through MFO Premium for SC/MC value sorted by highest Sharpe ratio over the full market cycle. Here's the shortlist:
Intrepid Endurance (formerly Intrepid Small Cap, ICMAX) - absolute value which means huge cash holdings until compelling valuations appear. Up 4% YTD despite 67% cash which implies that equity portion was up 12%. Lost 18% in the 2007-09 crash. In a similar vein but without full-cycle performance is Aston/River Road Independent Value (ARIVX) - the former manager of ICMAX is at 85% cash and has still gained 8.5% YTD which implies about a 60% gain in the equity portfolio. Most folks have been pretty caustic about the funds because the managers have been steadily harvesting gains and building cash since about 2011 which means they've missed the current party.
Victory Sycamore Established Value (VETAX) - $4 billion mid-cap fund with a value bias. Nominally has a load though those are often avoidable. Fully invested, consistently top decile performer. Lost 43% in the market crash, substantially less than the index.
Wells Fargo Special Mid Cap Value (WFPAX) - $3.5 billion mid-cap fund with a value bias, same story on the load. Launched in 1998 but the current team has been onboard about seven years, top 5% performer. Down 44% in the crash.
Hennessy Cornerstone Mid Cap 30 (HFMDX) - no-load with about a billion. Substantially more volatile than the two funds above, somewhat higher returns, very low turnover.
Queens Road SCV (QRSVX) - about $135 million, lots of insider ownership, tends toward small blend, top 20% over time. About 20% cash at the moment and up about 5% YTD. Dropped 42% in the crash versus 53% for a comparable index fund.
Intrepid Disciplined Value (ICMCX) - the all-cap value version of Intrepid Endurance. It's about half cash, half stocks now. 4.5% YTD. Lost 37% in the crash. It's a true all-cap value so it's hard to benchmark - most value indexes are mostly large cap and most mid-cap value indexes are mostly midcap. Eyeballing several, I'd say that a comparable passive product might have lost 50-55% compared to this fund's 37%.
One possibility with a bit more risk might be Adirondack Small Cap (ADKSX) which dropped an index-like 52% in the crash but rebounded so sharply that it's now leading its peers by 2.7% annually over the full cycle.
If you're a true believer in the research, you really need to look at Towle Deep Value (TDVFX) which has about the cheapest and smallest-cap portfolio around. Shorter record - just under five years - but very solid returns, vast insider ownership, no marketing, healthy internal culture. Microcap deep value is not, to be clear, a place for the faint of heart.
Just some teasers,
David

There is a big difference between the various kinds of "dividend" funds, and you need to do your homework (including actually reading the prospectuses) before you invest. I am always shocked when investors are surprised by something that happens to one of their investments, only to find out they could have known this might/would/could have happened and that it was part of the prospectus.
That being said, we have used a number of "dividend" funds over the years, a few of which we think have merit. Some, like PFF, are more fixed-income than equity, and have much more downside risk than one might think when prices on the underlying securities are at rather high premiums. Timing could be important here. We bought PFF in March of 2009 and rode it for quite a while. Salient Select Income KIFYX is also worth a look, I think. For REITS, it is hard to beat Cohen & Steers CSRSX and ICF.
Some mutual funds, like TIBIX and IVFIX, have dividend yield as an integral part of their investment philosophy. There are ETFs that combine income with targeted low volatility, such as SPHD. Others target only yield, like VYM, SDY, CVY, and PFM.
The current attraction of dividend-paying equities is that most companies' bonds are over-priced (meaning tiny yields), with lots of downside. The stocks not only have some long-term growth potential, but have a much higher yield than the bonds. But there is no free lunch in the dividend-investing arena. As in all investing, buyer beware.

PFF is awesome the last couple of years. Go back farther than that, alas, and it falls well behind other div-oriented funds or etfs. If considering, be sure to check out its headsnapping (>60%) plunge from summer 08 on.

Not an expert, but looking back over the last 2 years (S&P 500) I would say it has been range bound between 2100 on the upside and 1850 on the downside.

Looks about right

Not the same SEQUX from past years? It might recover but too many other good choices.

Not an expert, but looking back over the last 2 years (S&P 500) I would say it has been range bound between 2100 on the upside and 1850 on the downside.

I believe Target (allocation) funds can be used quite effectively to not only get you to "work retirement", but also as a tool to get you through until your "earthly retirement" aka death. Something I have shared before and I am still refining are these investment thoughts:
bee's Target Date Strategy:
I've often thought there are really two target dates, one targeting retirement from "work" and one targeting retirement from "earth".
Fully funding a retirement dated (glide path allocation) fund makes perfect sense. As a retirement dated fund glides towards its maturity date it attempts to provide a smooth landing for your investment at that date.
Effectively, at "work" retirement, an investor would have most of their assets in low risk investments. This might be helpful if the markets happens to severely correct in the first 5 years of retirement, but this portfolio must also be re-allocated the prepare for longevity risk (your money needs to last as long as you do). So, during the first few years of retirement a portion of this retirement portfolio needs to reallocated into investments that attempt to achieve portfolio longevity in retirement.
In a sense, a retiree could reallocate a percentage of their retirement portfolio into target date funds that target the incremental need to reach "earthly" retirement. Much like laddering CDs, a retiree could ladder target date funds in 5 year increments that will be used for spending if the retiree is lucky enough to reach that target date.
I could envision a retiree owning 6 separate retirement dated funds, each maturing 5 years further into the future (funding years 65-95 or 70-100) and each needing differing amounts of initial funding based on financial needs during that 5 year period in the future. The last fund matures on your date of death and pays your funeral expenses.
Sorry if some of this sounds a bit morbid to the reader.

When you sell shares, you realize a capital gain or loss regardless of how you're paid (in cash or in stocks that Sequoia gave you instead). If you get stocks, their basis is what you "paid" for them, i.e. the value of the Sequoia shares you just traded in. So if you flip those stocks immediately, you have no additional gain or loss.
So where did the gain on the underlying stocks go? The general rule is when a company (such as a mutual fund) sells stocks it owns, it recognizes a gain or loss. It might sell stocks to raise cash for your redemption. Or it might "sell" you those stocks directly (redemption in-kind) to meet your redemption request.
But there's one special line in the tax code (IRC 852(b)(6)) that says this general rule doesn't apply to redemptions in kind for registered investment companies (mutual funds, ETFs). Poof! No cap gain - no gain passed through to you, no gain for the fund.
Your "on the other hand" description is right, but usually not as much of a problem as it might appear. If you've owned the shares awhile, your shares may have gone up 25% since you bought them, while the fund is planning a 20% gains distribution. If you were to redeem your shares, you would wind up recognizing a 25% gain, rather than get the 20% distribution. So you might grin and bear it - at least you're not recognizing more gain than you actually made with the investment. Expensive, but not really unfair.
Investors who held their shares for fewer years (say their share prices are up 15%) are the ones who would be inclined to sell. Otherwise, they would recognize gains greater than what they'd made in the fund. As you wrote, that means that more gains would be distributed to the remaining shareholders. So instead of a 20% distribution, the fund might wind up making a 23% distribution. Still not enough to induce you (with 25% share appreciation) to sell, but there could be a few other shareholders with 22% appreciation who would now decide to sell. Ultimately, an equilibrium point is reached.
All this assumes people are astute about their tax situations and act rationally. That's your laugh for the day.

One thing I really like about a couple of Skeet's funds is that they are load funds from load families. Not just ordinary load families, they're run by insurance companies. And they merit consideration.
Principal offers some pretty solid funds through retirement plans, but they're also available at the retail level, NTF, at some brokerages.
Here's the Fidelity NTF listing for PMDAX (it's a Fidelity fund pick).
Don't get thrown off by its 3* rating; that's because M* ratings incorporate the impact of loads, and M* overweights that impact for funds with shorter lifetimes (this fund is rated on its three year record only). Instead, see it as a 4* noload fund:
http://www.morningstar.com/funds/XNAS/PMDAX.lw/quote.html
I'm less familiar with SunAmerica - I tend to associate it with VAs, and apparently it's now (since 1998) a subsidiary of AIG. Talk about queasy feelings. Yet the fund seems solid. You can purchase it NTF through TDAmeritrade.
American Century funds, like funds from PIMCO and a variety of other families are sold both load and noload. The noload version of TWEAX is TWEIX. (When one drops the load, whether on TWEAX or TWEIX, the fund gets bumped to a 5 star fund; TWEIX is less expensive as it doesn't have a 12b-1 fee.) One downside is that it's not particularly tax efficient, even allowing for its emphasis on dividends.
LCEIX (now LCEAX) has been on my short list for years, in part because it is more tax-efficient than some of the other funds that pop out in the LCV space.
FWIW, Fidelity added several families (including Invesco) to its load waiver list about three years ago. Here's my post on the Fidelity waivers:
http://www.mutualfundobserver.com/discuss/discussion/6048/fidelity-waives-loads

Yikes - Just when I thought these retirement options couldn't get any more complicated ... :)
Nice summary msf.
There seem to be (from my cursory reading) about an equal number of proponents of the Roth vrs. Traditional IRA. With the traditional you put a lot more money to work right away (since it's pre-tax money). With the Roth you make out like a bandit during the withdrawal years (unless the rules change).
Both good ways to invest. Whatever plan is selected, through diligent online research, one can uncover the fine points. I'd encourage Hawk's daughter to do this, regardless of plan. It took me 6-7 years after I did the first (of 3) Roth conversions to fully understand all the restrictions and "ins & outs." Really complex rules - and even the experts sometimes offer seemingly contradictory answers.
Ah-em ... if I may say ... We 403B people paved the road for the later 401K. Originally the deferred compensation concept was designed for public employees. The private sector plans came after. An interesting (not widely known) quirk in the early 403B rules allowed us to transfer money out to other custodians while we were still employed. Uncle Sam later plugged that loophole - I believe sometime after 2000. Nice while it lasted.

@Hawkmountain: One nice thing about a roth is that if she holds it for 5 years, she can use up to $10,000 (one time limit) towards the purchase of her first home. Admittedly, you lose the compounding of that money if you withdraw it, but for some, it's a nice option to have. You can also withdraw principal at any time for the same purchase.

Hi Hawk,
(Added late): Here's a substantive publication explaining the difference between deduction and reduction. http://www.ofm.wa.gov/policy/25.50.htm. It's been too long since I contributed to a 403B (20 years), but some of the fog is clearing as I read this. A 403B actually represents deferred income. That's why you're able to defer paying taxes on the income. A Roth, by contrast, is funded with current income on which taxes must be paid up front.
Psychologically, I suspect she may be more apt to stick with a pre-tax workplace plan (like a 403B) - and they're fine long-term investments. As I understand Roths, the after-tax contribution portion can be withdrawn at any time. There's a lot more hoops to jump through with the pre-tax contributions.
But I really like Roths. Tax free compounding and tax free withdrawals are hard to beat. Tough call. Just be sure that either way she socs the $$ away and leaves it alone during the working years. One caveat with Roths is that it's a pretty generous tax provision and so the law could potentially be altered in the future to where they'll find some way to tax them.
While there's good arguments on both sides, I'd think that in most cases over very long periods one comes out dollars ahead with the Roth. But it's not a slam-dunk. Too much depends on the tax bracket you're in when contributing and again when you're withdrawing.
One source which attempts to compare the benefits of Roths vs Traditional plans: http://www.401khelpcenter.com/401k/whitehouse_roth.html#.VyLHAtT3aK0

Well, I never heard of 'reduction' until now. WDIK? But the S and DIL want to know which to pick for her. She's 29, teaches at a college and now after two years is eligible to contribute.
Should she pony up, I suppose like a Roth, or do deferred like I suppose a 403B?
Your thoughts are always welcome.
best,hawk

Is Schwab going to stop selling load funds from Franklin Templeton (e.g. TPINX) or Oppenheimer (e.g. OIGAX)? Of course not, even though these are not only load funds, but load classes - if you go to E*Trade, they'll gladly sell you the Templeton fund or the Oppenheimer fund with a load.
Schwab is only going to stop selling a share class if it can't negotiate a load waiver. This is hardly generosity on Schwab's part. It typically get 40 basis points per year for NTF shares sold, and (admittedly I haven't checked) less for load shares. If you're working with an adviser, the adviser gets the lion's share of the front load, so Schwab comes out on the short end of the stick by selling the funds with a load (as opposed to load-waived).
Schwab (unlike Fidelity) used to include TF funds as well as NTF funds in its select lists. It stopped that years ago - now it tries to drive investors to its most profitable share classes. I don't see a difference between this and the supposed conflict of interest that advisors have in selling load funds. Except that soon (at least for retirement accounts) advisors will be held to a fiduciary standard that Schwab can avoid.
Let's look at those load-waived classes. Why would I go to Schwab and buy a 12b-1 laden (dare I say loaded) share class when TGBAX can be purchased elsewhere, albeit with a TF? That higher ER is just skimming money from the fund to pay Schwab for shelf space.
On general principle, I for one don't see anything positive about being offered less choice. But it makes for great PR, and evokes the predictable hurrahs.

I'm a little late to this discussion, but here goes:
1. For domestic stocks, use a low-cost index fund/ETF as a core hold. Then, if you want to "explore", search for talented management (team) that runs a fairly concentrated portfolio for a reasonable cost. Another option would be to add a sector fund/ETF or something that does not mimic the index (maybe something like SPHD or something that emphasizes volatility or dividends, for example).
2. For international stocks, there is a lot more disparity, and indexing is not a clear winner, unless you don't want to take the time to research active funds. Fees may be a bit higher for actively-managed funds here, so pay attention to out-performance net of fees.
3. For bonds, understand that the past 10 years will not be repeated over the next 10 years. That being the case, fund expenses are even more critical.
4. If returns, in general, will be lower over the next few years (which some smart people believe), costs take on a bigger part of the screening process.
5. If you are buying actively-managed funds, remember the most important consideration is who runs the strategy and what their record is. You are not buying an index; you are hiring a manager. Do your homework, and do not skimp on this step.
6. In taxable accounts, remember the importance of tax efficiency. That means taxable distributions can sometimes be deadly. Use funds that tend to have these in your retirement accounts, where taxation is deferred.

@ Charles & MFO Members: IBD Slant
“There definitely has been, over the past 15 or so years, a big move away from load shares,” said Scott Cooley, director of policy research for Morningstar Inc. “Fifteen years ago, load funds were more than 40% of mutual fund assets. Now they’re down to 20%. The industry has been growing, but load funds have lost market share.”
Schwab insisted that the move is a response to dwindling interest by shareholders in paying loads, not a response to a recent Department of Labor (DOL) rule that tightens restrictions on advisor conflicts of interest and requires advisors to disclose how they’re paid.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/charles-schwabs-cutback-on-load-mutual-funds-reinforces-trend/

@Hank- What an amazing coincidence... my very first car was a "previously owned" '56 Plymouth! My parents didn't have a car, so I had to learn to drive on my own. In 1959 the Coast Guard assigned me to a Loran Station on the lonely Northern CA coast and there was no Greyhound bus service. So I had to buy a car and learn to drive on the then very rugged coastal Hwy 1.
My learning experience ended the useful service life of most of the Plymouth's fenders. Fortunately, Yellow Cab had used a large fleet of these cars, and SF junkyards had a good supply of yellow fenders. After a couple of years that car was quite a sight... blue and black with three bright yellow fenders. It did have the advantage that other drivers give me a wide margin of clearance.
I shared your father's experience... on one trip up to the Loran station at Point Arena I was on a back road in the middle of nowhere when the engine lost oil pressure, with the usual ruinous results. Fortunately some kindly folks eventually came along and took me the remainder of the way to Point Arena, in their spiffy Nash sedan.

1956 Plymouth (Not Mine!)

@Hank- Your experiences and mine are almost identical with respect to when we started and how we started.
I absolutely agree with your comment "While I loath front-loads and the commission-based reps who peddle them, I benefitted greatly from his experience. In particular, I became more acclimated to taking a degree of risk in pursuit of a higher return than what I observe in many first-time investors who don't have the benefit of an advisor. So, the load may have been worth it."
Exactly.

@OJ - Thanks. Nice to know I'm in good company!
Of course in the early 70s mutual funds weren't as widely known or used as today. Unless raised in a family accustomed to investing, you likely benefitted from a bit of hand-holding as the "service" rendered by commission-based brokers was sometimes called.
Brings to mind a line from a story I read years ago: "Father was a man of substance, but the substance was seldom cash". Among the investments I recall my Dad making was a previously owned '56 Plymouth that rarely ran - which he traded in on a '59 Edsel. Need I say more? :)
Regards