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    Home»Mutual Funds»3 Large-Cap Value Funds With Upside to Avoid Present Market Volatility
    Mutual Funds

    3 Large-Cap Value Funds With Upside to Avoid Present Market Volatility

    October 16, 2024


    Continued high prices are frustrating consumers, which is denting their sentiment. Inflation declined substantially over the past few months, prompting the Federal Reserve to cut interest rates for the first time in more than four years. However, inflation jumped again in September, raising concerns over the economy’s health.

    Given this situation, investing in large-cap value funds like T. Rowe Price Value TRVLX, Federated Hermes MDT Large Cap Value Svc FSTKX and Dodge & Cox Stock I DODGX thus appear to be a safe choice.

    Inflation Jumps Taking a Toll on Stocks

    Inflation jumped in September raising fears of a slowing economy. The consumer price index (CPI) rose 0.2% sequentially in September, matching August’s increase, the Commerce Department said last week. However, the reading came in higher than the consensus estimate of an increase of 0.1%.

    Year over year, CPI jumped 2.4%, the smallest increase in over 3 1/2 years. Core CPI, which excludes the volatile food and energy prices, rose 3.3% from the year-ago levels, higher than the consensus estimate of a jump of 3.2%.

    The jump comes days after the Federal Reserve announced a 50-basis point rate cut, the first since March 2020. The Federal Reserve’s benchmark policy rate now ranges between 4.75% and 5%, the lowest since April 2023, with markets hopeful about at least two more 25-basis-point rate cuts this year.

    However, fears of a slowing economy were reignited following the higher-than-expected inflation reading, which has been taking a toll on stocks.

    Consumer Sentiment Declines

    The University of Michigan’s preliminary reading showed that consumer sentiment dropped to 68.9 in October from September’s final reading of 70.1 and also came in lower than the consensus estimate of a reading of 70.8.

    The survey’s reading of one-year inflation expectations jumped to 2.9% from 2.7% the month earlier.

    The weak economic data has raised concerns that the central bank could slow its pace of future rate cuts if inflation doesn’t decline substantially.

    These factors could keep markets volatile for a longer period. Given this situation, investing in utility mutual funds appears to be a wise decision. The funds offer essential stability and growth potential, making them a prudent consideration for savvy investors.

    Large-Cap Value Funds a Safe Bet

    We have identified three large-cap value mutual funds that have demonstrated impressive annualized returns over 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy), require an initial investment of no more than $5,000 and have a low expense ratio.

    The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

    T. Rowe Price Value fund seeks long-term capital appreciation. TRVLX invests at least 65% of total assets in common stocks that the portfolio manager regards as undervalued. T. Rowe Price Value fund’s stock holdings consist primarily of large-company issues, but also include smaller companies.

    TRVLX’s 3-year and 5-year annualized returns are 6.7% and 12.4%, respectively. T. Rowe Price Value fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%, which is lower than its category average of 32%.

    To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

    Federated Hermes MDT Large Cap Value Svc fund’s investment objective is to provide growth of income and capital. FSTKX pursues its investment objective by investing primarily in equity securities of companies that are generally leaders in their industries, are characterized by sound management and have the ability to finance expected growth.

    FSTKX’s 3-year and 5-year annualized returns are 10.8% and 13.6%, respectively. Federated Hermes MDT Large Cap Value Svc fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.98%.

    To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

    Dodge & Cox Stock I fund seeks long-term growth of principal and income. A secondary objective is to achieve a reasonable current income. DODGX invests primarily in a broadly diversified portfolio of common stocks.

    DODGX’s 3-year and 5-year annualized returns are 8.7% and 15.1%, respectively. Dodge & Cox Stock I fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.51%, which is lower than its category average of 98%.

    To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

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    To read this article on Zacks.com click here.

    Zacks Investment Research



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