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3 Large-Cap Value Funds to Buy as Inflation Resumes Climb
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Volatility has returned to markets once again ignited by fears of a delay in rate cuts as inflation has resumed its climb. The Labor Department reported on Apr 10 that the consumer price index (CPI) rose 0.4% month over month in February, higher than the consensus estimate of a rise of 0.3% and the highest since September 2023.
Year over year, CPI jumped 3.5% in March, higher than economists’ expectations of a rise of 3.4%. This follows a 3.1% and 3.2% rise in February. Inflation has now increased for three consecutive months after falling below the 3% mark at the end of 2023.
The Federal Reserve’s 2% target still appears a distant dream. All three major indexes declined on Wednesday following the CPI report. The Dow, the S&P 500 and the Nasdaq ended 1.1%, 1% and 0.9% lower, respectively.
Although the Federal Reserve assured last month that it plans three rate cuts by the end of this year, it hasn’t given an exact time for the first rate cut. Moreover, it said that it is in no rush to start rate cuts as inflation remains stubbornly high.
The fresh inflation data once again raised concerns that the central bank could further delay rate cuts, which could weigh on the broader economy.
Given this situation, an astute investor might opt to invest in large-cap value funds as a means of effectively mitigating risks. Historically, large-cap funds have demonstrated stability and are often regarded as more reliable than mid- or small-cap funds.
Also, value funds, which consist of stocks usually priced below fundamental metrics such as earnings, book value, and debt-to-equity ratios, and providing dividend payments, offer an attractive choice for investors seeking profitable investment 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).
AB Equity Income A (AUIAX - Free Report) fund invests primarily in the equity and fixed-income securities of companies in the utilities industry. AUIAX’s investment strategy has four major thrusts: electric utilities that have favorable regulatory environments and strong managements; telecommunications companies with strong strategic positions, cable television and wireless companies; and natural gas and water utility companies.
AUIAX’s 3-year and 5-year annualized returns are 12.5% and 11.3%, respectively. AB Equity Income A 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.
Northern Income Equity (NOIEX - Free Report) fund seeks to provide a high level of current income with long-term capital appreciation as a secondary objective. NOIEX’s approach is to identify the securities of companies that generate high current yields and offer prospects for growth and possible capital appreciation. In pursuing its objective, the Northern Income Equity fund invests at least 65% of its total assets in a mix of income-producing equity securities, with no limit on the fund's ability to invest in non-investment grade fixed income and convertible debt securities.
NOIEX’s 3-year and 5-year annualized returns are 11.5% and 12.4%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Shelton Equity Income Investor (EQTIX - Free Report) fund seeks to achieve a high level of income and capital appreciation by investing primarily in income-producing U.S. equity securities. EQTIX invests primarily in securities that generate a relatively high level of dividend income and have the potential for capital appreciation. Shelton Equity Income Investor fund also invests at least 80% of its total assets in stocks.
EQTIX’s 3-year and 5-year annualized returns are 10.4% and 10.9%, respectively. Shelton Equity Income Investor fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%.
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 Inflation Resumes Climb
Volatility has returned to markets once again ignited by fears of a delay in rate cuts as inflation has resumed its climb. The Labor Department reported on Apr 10 that the consumer price index (CPI) rose 0.4% month over month in February, higher than the consensus estimate of a rise of 0.3% and the highest since September 2023.
Year over year, CPI jumped 3.5% in March, higher than economists’ expectations of a rise of 3.4%. This follows a 3.1% and 3.2% rise in February. Inflation has now increased for three consecutive months after falling below the 3% mark at the end of 2023.
The Federal Reserve’s 2% target still appears a distant dream. All three major indexes declined on Wednesday following the CPI report. The Dow, the S&P 500 and the Nasdaq ended 1.1%, 1% and 0.9% lower, respectively.
Although the Federal Reserve assured last month that it plans three rate cuts by the end of this year, it hasn’t given an exact time for the first rate cut. Moreover, it said that it is in no rush to start rate cuts as inflation remains stubbornly high.
The fresh inflation data once again raised concerns that the central bank could further delay rate cuts, which could weigh on the broader economy.
Given this situation, an astute investor might opt to invest in large-cap value funds as a means of effectively mitigating risks. Historically, large-cap funds have demonstrated stability and are often regarded as more reliable than mid- or small-cap funds.
Also, value funds, which consist of stocks usually priced below fundamental metrics such as earnings, book value, and debt-to-equity ratios, and providing dividend payments, offer an attractive choice for investors seeking profitable investment 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).
AB Equity Income A (AUIAX - Free Report) fund invests primarily in the equity and fixed-income securities of companies in the utilities industry. AUIAX’s investment strategy has four major thrusts: electric utilities that have favorable regulatory environments and strong managements; telecommunications companies with strong strategic positions, cable television and wireless companies; and natural gas and water utility companies.
AUIAX’s 3-year and 5-year annualized returns are 12.5% and 11.3%, respectively. AB Equity Income A 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.
Northern Income Equity (NOIEX - Free Report) fund seeks to provide a high level of current income with long-term capital appreciation as a secondary objective. NOIEX’s approach is to identify the securities of companies that generate high current yields and offer prospects for growth and possible capital appreciation. In pursuing its objective, the Northern Income Equity fund invests at least 65% of its total assets in a mix of income-producing equity securities, with no limit on the fund's ability to invest in non-investment grade fixed income and convertible debt securities.
NOIEX’s 3-year and 5-year annualized returns are 11.5% and 12.4%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Shelton Equity Income Investor (EQTIX - Free Report) fund seeks to achieve a high level of income and capital appreciation by investing primarily in income-producing U.S. equity securities. EQTIX invests primarily in securities that generate a relatively high level of dividend income and have the potential for capital appreciation. Shelton Equity Income Investor fund also invests at least 80% of its total assets in stocks.
EQTIX’s 3-year and 5-year annualized returns are 10.4% and 10.9%, respectively. Shelton Equity Income Investor fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%.
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 >>