Large-cap funds are better than small or mid-cap funds for risk-averse investors. These funds have exposure to large-cap stocks, with a long-term performance history and more stability than what mid or small caps offer. Companies with market capitalization of more than $10 billion are generally considered large cap. However, due to their significant international exposure, large-cap companies might be affected by a global downturn.
Meanwhile, investors who are looking for a bargain — stocks trading at a discount — are mostly interested in value funds, which pick stocks that tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity) and pay out dividend. 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. However, investors interested in choosing value funds for yield, should check the mutual fund yield as not all value funds comprise only companies that use their earnings primarily to pay out dividend.
Below we share with you three top-ranked, large-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Edgar Lomax Value Fund (LOMAX - Free Report) aims to offer long-term capital growth while providing some income. The majority of the fund’s total assets are invested in equity securities consisting of common stocks and other securities such as convertible securities, ETFs, rights and warrants. About a fifth of the fund’s assets are invested in stocks of companies from the S&P 100 Index. LOMAX has returned 3.3% over the past three years.
LOMAX has an expense ratio of 0.71% compared with the category average of 1.00%.
Putnam Equity Income Fund Class A (PEYAX - Free Report) aims for capital growth and current income. The fund invests in common stocks of mid-size and large U.S. companies focusing on value stocks. These value stocks hold potential for either capital growth or current income, or both. Fund managers look at company's valuation, growth potential, projected future earnings, cash flows and dividends to make investment decisions. PEYAX has returned 5.4% over the past three years.
Darren A. Jaroch is one of the fund managers of PEYAX since 2012.
Vanguard Equity-Income Fund Investor Shares (VEIPX - Free Report) aims to provide a level of current income that is above-average and decent long-term capital growth. The fund invests mainly common stocks of medium-sized and large companies that are undervalued compared to similar stocks and pay above-average levels of dividend income. VEIPX has returned 4.3% over the past three years.
As of the end of March 2020, VEIPX held 191 issues, with 3.94% of its assets invested in Johnson & Johnson.
To view the Zacks Rank and past performance of all large-cap value mutual funds, investors can click here to see the complete list of funds.
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