Multiple issues have been denting investors' confidence, and markets haven’t been able to maintain their rally this year. Interest rates, geopolitical tensions and rising inflation have been taking a toll on markets since the turn of the year.

Although the U.S. economy is recovering at a faster pace on the back of quicker GDP growth than in the previous quarter, rising inflation has made the bulls nervous and given the bears optimism. In this case, income-seeking investors should look for large-cap value funds as they assure handsome returns once the volatility eases and markets bounce back from the lows. Thus, funds like American Funds American Mutual Fund Class F-1 (AMFFX Quick QuoteAMFFX - Free Report) ,Bridge Builder Large Cap Value Fund (BBVLX Quick QuoteBBVLX - Free Report) andCommerce Value Fund (CFVLX Quick QuoteCFVLX - Free Report) are likely to benefit in the near term.

Multiple Reasons Unsettling Markets

Stocks have taken a beating since the turn of the year. One of the major reasons for this is growing interest rates. Growth stocks, especially the tech sector, have been the worst performers as fears of rising interest rates are worrying investors.

Rising prices too have been a cause of concern and the Fed is gearing up to rise interest rates, beginning next week. This is expected to be the first of the multiple rate hikes that the Fed has planned for this year. This could take a toll on growth stocks.

Geopolitical tensions surrounding Russia’s invasion of Ukraine last month have added to the worries of investors. Energy prices have been rising following sanctions imposed by multiple counties on Russia.

This is likely to keep markets volatile for some time or at least till there is a solution to the Russia-Ukraine crisis. Thus, investors looking to avoid risk should go for large-cap value funds. These funds invest in large-cap equities that have a longer track of success and are more stable than mid- or small-cap stocks.

At the same time, value funds, which comprise equities that tend to trade at a lower price than their fundamentals (i.e., earnings, book value, debt-equity) and pay out dividends, are popular among bargain-hunting investors.

Top 3 Large-Cap Value Funds to Buy Now

Rising interest rates, growing geopolitical tensions and continuing fears of coronavirus may lead to further uncertainty in the near future. However, these are all temporary and volatility is expected to ease in the coming days. In the long run, value stocks are expected to outperform the growth ones across all asset classes and are less vulnerable to the trending markets.

Given this scenario, bargain-seeking investors should go for large-cap value mutual funds as they are undervalued but are more stable during this situation and are likely to perform well in the long run.

We have selected three such large-cap value mutual funds that have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

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

American Funds American Mutual Fund Class F-1 invests the majority of its investable assets in common stocks of companies that are expected to contribute to the growth of the American economy and have stable dividends.

AMFFX’s 3-year and 5-year annualized returns are 12.6% and 11%, respectively. Annual expense ratio of 0.64% is lower than the category average of 0.94%. American Funds American Mutual Fund Class F-1 has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Bridge Builder Large Cap Value Fundaims for capital appreciation. BBVLX invests the majority of its assets in securities of large-capitalization companies and other instruments, such as certain investment companies, with economic characteristics that seek to track the performance of securities of large-capitalization companies.

Bridge Builder Large Cap Value Fund has 3-year and 5-year annualized returns of 16.1% and 12.4%, respectively. Annual expense ratio of 0.24% is lower than the category average of 0.94%. BBVLX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Commerce Value Fund invests the majority of its investable assets in common stocks of companies. CFVLX typically invests in stocks within the Russell 1000 Value Index that promise stable dividends.

Commerce Value Fund has 3-year and 5-year annualized returns of 11.7% and 10.1%, respectively. Annual expense ratio of 0.71% is lower than the category average of 0.94%. CFVLX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

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