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3 Large-Cap Value Funds to Buy as Consumer Sentiment Declines
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Growing inflationary pressures and concerns over a slowing economy are denting consumers’ confidence. The University of Michigan’s final reading of the consumer sentiment index fell 0.9% to 68.2 month over month in June from 69.1 in May to hit a seven-month low.
The survey’s index of Current Economic Conditions also declined to 65.7 from 69.6 in May. Consumers’ outlook for the next six months also slipped to 56.9 as both indexes hit their lowest levels in six months. The survey’s one-year outlook for inflation jumped to 4.4%.
Inflation has started showing signs of decline in April and May. However, the Federal Reserve has been delaying its planned rate cuts after inflation rose in the first quarter following a sharp decline in 2023.
The consumer price index (CPI) remained unchanged sequentially in May after rising 0.3% in April. Year over year, CPI jumped 3.3% in May, slightly below the consensus estimate of an increase of 3.4%.
Despite the decline, inflation remains elevated and higher than the Fed’s 2% target. The Fed now sees only one 25 basis point rate cut this year, substantially lower than the three projected in March.
A delay in cutting interest rates means that higher interest rates will stay longer, which could make markets volatile. Given this situation, a wise investor might pick large-cap value funds to reduce risks.
Large-cap funds, which invest in big, well-established companies, have been more stable and reliable compared to mid- or small-cap funds. Additionally, value funds, which include stocks priced lower than their true worth based on factors like earnings, book value, and debt levels, and often provide dividend payments, are good options for investors looking for profitable opportunities.
3 Best Choices
We've 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).
BNY Mellon Dynamic Value Fund (DAGVX - Free Report) seeks capital appreciation. DAGVX invests at least 80% of its assets in stocks. BNY Mellon Dynamic Value Fund invests in companies of any size, and uses a value approach in selecting stocks for investment.
DAGVX’s 3-year and 5-year annualized returns are 11.1% and 15.8%, respectively. BNY Mellon Dynamic Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.93.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Northern Large Cap Value Fund (NOLVX - Free Report) seeks long-term growth of capital, and invests the majority of its net assets in securities of large-cap companies. NOLVX pursues high total returns by buying stocks when they are out of favor and undervalued, and then selling them when they have returned to favor and achieved their full value.
NOLVX’s 3-year and 5-year annualized returns are 5.8% and 11.3%, respectively. Northern Large Cap Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.57.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Value (TRVLX - Free Report) 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 6.2% and 12.8%, respectively. T. Rowe Price Value fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%.
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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3 Large-Cap Value Funds to Buy as Consumer Sentiment Declines
Growing inflationary pressures and concerns over a slowing economy are denting consumers’ confidence. The University of Michigan’s final reading of the consumer sentiment index fell 0.9% to 68.2 month over month in June from 69.1 in May to hit a seven-month low.
The survey’s index of Current Economic Conditions also declined to 65.7 from 69.6 in May. Consumers’ outlook for the next six months also slipped to 56.9 as both indexes hit their lowest levels in six months. The survey’s one-year outlook for inflation jumped to 4.4%.
Inflation has started showing signs of decline in April and May. However, the Federal Reserve has been delaying its planned rate cuts after inflation rose in the first quarter following a sharp decline in 2023.
The consumer price index (CPI) remained unchanged sequentially in May after rising 0.3% in April. Year over year, CPI jumped 3.3% in May, slightly below the consensus estimate of an increase of 3.4%.
Despite the decline, inflation remains elevated and higher than the Fed’s 2% target. The Fed now sees only one 25 basis point rate cut this year, substantially lower than the three projected in March.
A delay in cutting interest rates means that higher interest rates will stay longer, which could make markets volatile. Given this situation, a wise investor might pick large-cap value funds to reduce risks.
Large-cap funds, which invest in big, well-established companies, have been more stable and reliable compared to mid- or small-cap funds. Additionally, value funds, which include stocks priced lower than their true worth based on factors like earnings, book value, and debt levels, and often provide dividend payments, are good options for investors looking for profitable opportunities.
3 Best Choices
We've 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).
BNY Mellon Dynamic Value Fund (DAGVX - Free Report) seeks capital appreciation. DAGVX invests at least 80% of its assets in stocks. BNY Mellon Dynamic Value Fund invests in companies of any size, and uses a value approach in selecting stocks for investment.
DAGVX’s 3-year and 5-year annualized returns are 11.1% and 15.8%, respectively. BNY Mellon Dynamic Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.93.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Northern Large Cap Value Fund (NOLVX - Free Report) seeks long-term growth of capital, and invests the majority of its net assets in securities of large-cap companies. NOLVX pursues high total returns by buying stocks when they are out of favor and undervalued, and then selling them when they have returned to favor and achieved their full value.
NOLVX’s 3-year and 5-year annualized returns are 5.8% and 11.3%, respectively. Northern Large Cap Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.57.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Value (TRVLX - Free Report) 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 6.2% and 12.8%, respectively. T. Rowe Price Value fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>