Value Funds Have Shifted Toward Tech Stocks

Traditional value funds now include tech giants to keep pace with benchmarks that are increasingly driven by AI firms.

Updated on Sept. 23, 2026 in Investing

Isometric editorial illustration showing a shipping container stacked with a server rack, representing the shift of value funds toward tech investments. — Traditional value mutual funds are increasingly incorporating large-cap technology stocks as managers seek to better align portfolios with major market benchmarks. AI Illustration. Upload story photo >

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Is now a good time to invest in traditional value funds that are adding tech stocks?

Value-oriented mutual funds are relaxing long-standing requirements to hold dividend-paying stocks in favor of large-cap technology companies. This shift comes as managers attempt to minimize tracking error against indices dominated by a few mega-cap AI-focused firms.

Why it matters

The concentration of market power in top-tier tech stocks makes traditional value investing harder to execute without exposure to these growth-oriented companies. Consequently, investors may find that funds marketed as value portfolios behave more like growth strategies than they did in previous years.

As of July 2026, funds like the $43.1 billion JPMorgan Equity Income portfolio have increased tech holdings, while large-cap growth stocks have outperformed large-cap value stocks by 64 percentage points since late 2022.

The players

Vanguard Dividend Growth fund

A $35 billion asset fund that saw its Morningstar rating downgraded to average following leadership and strategy changes.

JPMorgan Equity Income fund

A $43.1 billion fund that now maintains significant exposure to technology stocks to align with market benchmarks.

Peter Fisher

A former manager at Vanguard who retired in July 2026 during a period of transition for the firm's dividend-focused offerings.

The details

Fund managers are removing mandates that force portfolio companies to pay or grow dividends, allowing them to buy tech giants like Amazon, Microsoft, and Nvidia. This change is a direct response to the S&P 500, where the top 10 stocks now account for roughly 40% of the index weight. By incorporating these high-growth stocks, managers aim to reduce the tracking error that occurs when a value fund deviates significantly from the performance of a tech-heavy market benchmark.

1987 saw the creation of the JPMorgan Equity Income fund.
1992 marked the launch of the Vanguard Dividend Growth fund.
Late 2022 triggered the AI-driven market frenzy following the release of ChatGPT.
June 2025 saw the addition of Amazon to the Russell 1000 Value index.
July 2026 was when manager Peter Fisher retired from Vanguard.

Money Landscape

The transition in value fund strategies reflects a broader move to adapt to the post-2022 market environment where AI-focused mega-cap tech stocks dominate index returns. This development marks a departure from traditional value investing principles that have historically prioritized steady dividends over high-growth tech exposure.

Investors should review their current mutual fund holdings to determine if the strategy still matches their intended risk and income goals. If your portfolio relies on value funds for stability, consider consulting with a qualified financial professional to assess how these structural shifts affect your long-term diversification.

The takeaway

The move toward tech-heavy value funds highlights the difficulty of maintaining traditional investment labels in a market concentrated at the top. Investors should check their current fund prospectuses to verify if recent strategy updates change the risk profile of their holdings.