5 Large-Cap Value Mutual Funds to Invest in a Choppy Market
The U.S. economy continues to wobble due to a series of banking failures. The collapse of First Republic Bank is the second-biggest baking failure in the history of the United States. JPMorgan Chase has acquired the stressed bank in a government-led public-private deal to make an immediate bailout.
U.S. treasury secretary, Janet Yellen raised concern that the world’s biggest economy could run out of cash and default on its obligation by Jun 1, if the debt ceiling is not raised. The event of such default could bring a dire impact on the U.S. economy resulting fall in credit rating, which could lead to higher interest rates and recession.
The Dow, the S&P 500, and the Nasdaq have gained 0.81%, 6.54%, and 14.89%, respectively, so far this year.
The Federal Reserve has yet again increased the overnight interest rates by a quarter of a percentage on Wednesday to meet its ambitious inflation target of 2% over the long term. Domestic inflation for the month of March came in at 5% year over year and is currently in a downward trajectory.
Major economic indicators like retail sales, and manufacturing PMI have shown stress in current months except for the labor market, which remained resilient and added over 1 million jobs in the past three months. The Fed except higher interest rates to slow down business activity and cut down demand for labor. The question remains whether the Fed will be able to strike the right balance between the higher interest rate and inflation to make a soft landing for the economy.
Geopolitical tensions continue to create energy crises and supply-chain challenges, which are also a threat to businesses worldwide. Thus, investors who seek low-risk investment can pick large-cap funds that have exposure to large-cap stocks with long-term performance history and assure more stability due to mature businesses. These companies have the potential to deliver higher returns and exhibit lower volatility amid adverse economic conditions.
Value funds generally invest in stocks that tend to trade at a price lower than their fundamentals (i.e earnings, book value, debt-equity) and pay out dividends. Value stocks are expected to outperform across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets.
We have thus selected five large-cap value mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
BNY Mellon Dynamic Value Fund DRGVX invests most of its assets along with borrowings, if any, in stocks of companies that have value, sound business fundamentals, and positive business momentum evaluated based on extensive quantitative and fundamental research by the portfolio manager. DRGVX also invests a small portion of its net assets in foreign equity securities with similar economic features.
Brian Ferguson has been the lead manager of DRGVX since Sep 30, 2003. Most of the fund’s exposure is in companies like Berkshire Hathaway (4.70%), Exxon Mobil (4.02%) and JPMorgan Chase (3.07%) as of 11/30/2022.
DRGVX’s three-year and five-year annualized returns are 27.5% and 10.9%, respectively. DRGVX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.68%, which is less than the category average of 0.94%.
To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JPMorgan Large Cap Value Fund JLVRX invests most of its assets along with borrowings, if any, insecurities of large-cap companies, including common stocks, debt and preferred stocks, which are convertible to common stocks. JLVRX invests in stocks with market capitalization like the one listed on the Russell 1000 Value Index at the time of investment.
Scott Blasdell has been the lead manager of JLVRX since Apr 4, 2013. Most of the fund’s exposure is in companies like Bristol Myers Squibb (3.68%), Wells Fargo (3.25%) and Berkshire Hathaway (2.86%) as of 12/31/2022.
JLVRX’s three-year and five-year annualized returns are nearly 27.2% and 9.4%, respectively. JLVRXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.54%, which is less than the category average of 0.94%.
Invesco Comstock Fund ACSDX invests most of its assets along with borrowings, if any, incommon stocks, derivatives and other instruments with similar economic characteristics, preferably in issues of large-cap companies. ACSDX advisors also invest a smaller portion of their net assets in real estate investment trusts.
Kevin C. Holt has been the lead manager of ACSDX since Aug 1, 1999. Most of the fund’s exposure is in companies like Chevron (2.88%), Bank of America (2.87%) and Elevance Health (2.83%) as of 10/31/2022.
ACSDX’s three-year and five-year annualized returns are 25.6% and 8.8%, respectively. ACSDX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.56% compared to the category average of 0.94%.
TCW Relative Value Large Cap Fund TGDIX invests most of its assets along with borrowings, if any, in equity securities of large-cap companies. TGDIX advisors choose to invest in companies with a prudent approach toward environmental sustainability, social responsibilities with good governance and firm financial resources.
Diane E. Jaffee has been the lead manager of TGDIX since Feb 28, 1999. Most of the fund’s exposure is in companies like McKesson (4.33%), Molina Healthcare (4.16%) and Centene (3.93%) as of 10/31/2022.
TGDIX’s three-year and five-year annualized returns are 24.2% and 7.2%, respectively. TGDIX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.70% compared to the category average of 0.94%.
Vanguard Windsor Fund VWNDX invests primarily in large and mid-cap companies, which, according to the fund’s advisors, are undervalued. VWNDX advisors consider undervalued stocks that are out of favor amongst investors and are trading at prices below average earnings and book value.
Richard S. Pzena has been the lead manager of VWNDX since Aug 2, 2012. Most of the fund’s exposure is in companies like Halliburton (2.30%), Wabtec (2.15%) and Metlife (2.14%) as of 10/31/2022.
VWNDX’s three-year and five-year annualized returns are 24.0% and 9.5%, respectively. VWNDX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.38% compared to the category average of 0.94%.
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