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3 Large-Cap Value Funds to Buy Amid Ongoing Market Volatility
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Wall Street ended sharply lower on Aug 2 as fears grew that the economy might slip into a recession as fresh data showed that jobs growth declined sharply, while the unemployment rate climbed to nearly a three-year high.
This year’s tech rally, which saw Nasdaq hitting multiple all-time highs till early July, fell 2.4% to finish at 16,776.16 on Friday. The index has declined over 10% from its recent all-time high and entered correction territory.
The Dow plummeted 1.5% or 610.71 points to close at 39,737.26, while the S&P 500 fell 1.8% or 100.12 points to end at 5,346.56.
The decline came as the Labor Department said that that jobs growth slowed more than expected in July to only 114,000, which as sharply lower than the 179,000 jobs added in June.
Also, the unemployment rate jumped to 4.3% in July, higher than the consensus estimate of a rise of 4.1% and the highest level since October 2021.
GDP grew at an annualized pace of 2.8% in the second quarter after advancing only 1.3% in the first quarter. Also, inflation has been declining sharply over the past couple of months.
Federal Reserve Chairman Jerome Powell, at the end of the July FOMC meeting, said that the central bank is ready to cut interest rates provided it is confident that inflation will continue to decline. Market participants are now expecting the first rate cut in September, followed by two more later this year.
However, the jobs report has raised fears that the Federal Reserve may have delayed too much with its rate cut plans. The Fed hiked interest rates by 525 basis points since March 2022 to take its benchmark policy rate to a 23-year-high in the range of 5.35-5.5%.
The economy showed immense resilience in the high-interest environment but the impacts of high borrowing costs may have started taking its toll on the economy. This has also been making markets volatile.
In this context, a prudent investor might consider putting money into large-cap value funds to effectively manage risks. Historically, large-cap funds have demonstrated stability and are generally viewed as more reliable compared to mid- or small-cap funds.
Also, value funds, which include stocks usually priced below key financial metrics like earnings, book value, and debt-to-equity ratios, and offer dividend payouts, represent an appealing choice for those looking for 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).
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 9.7% and 13%, 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.
Homestead Value (HOVLX - Free Report) fund seeks capital growth over the long term and, secondarily, income. Under ordinary conditions, HOVLX invests at least 80% of its total assets in common stocks of established companies.
HOVLX’s 3-year and 5-year annualized returns are 7.7% and 11.6%, respectively. Homestead Valuefund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.64%.
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 7.4% and 10.9%, respectively. Shelton Equity Income Investor 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 Amid Ongoing Market Volatility
Wall Street ended sharply lower on Aug 2 as fears grew that the economy might slip into a recession as fresh data showed that jobs growth declined sharply, while the unemployment rate climbed to nearly a three-year high.
This year’s tech rally, which saw Nasdaq hitting multiple all-time highs till early July, fell 2.4% to finish at 16,776.16 on Friday. The index has declined over 10% from its recent all-time high and entered correction territory.
The Dow plummeted 1.5% or 610.71 points to close at 39,737.26, while the S&P 500 fell 1.8% or 100.12 points to end at 5,346.56.
The decline came as the Labor Department said that that jobs growth slowed more than expected in July to only 114,000, which as sharply lower than the 179,000 jobs added in June.
Also, the unemployment rate jumped to 4.3% in July, higher than the consensus estimate of a rise of 4.1% and the highest level since October 2021.
GDP grew at an annualized pace of 2.8% in the second quarter after advancing only 1.3% in the first quarter. Also, inflation has been declining sharply over the past couple of months.
Federal Reserve Chairman Jerome Powell, at the end of the July FOMC meeting, said that the central bank is ready to cut interest rates provided it is confident that inflation will continue to decline. Market participants are now expecting the first rate cut in September, followed by two more later this year.
However, the jobs report has raised fears that the Federal Reserve may have delayed too much with its rate cut plans. The Fed hiked interest rates by 525 basis points since March 2022 to take its benchmark policy rate to a 23-year-high in the range of 5.35-5.5%.
The economy showed immense resilience in the high-interest environment but the impacts of high borrowing costs may have started taking its toll on the economy. This has also been making markets volatile.
In this context, a prudent investor might consider putting money into large-cap value funds to effectively manage risks. Historically, large-cap funds have demonstrated stability and are generally viewed as more reliable compared to mid- or small-cap funds.
Also, value funds, which include stocks usually priced below key financial metrics like earnings, book value, and debt-to-equity ratios, and offer dividend payouts, represent an appealing choice for those looking for 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).
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 9.7% and 13%, 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.
Homestead Value (HOVLX - Free Report) fund seeks capital growth over the long term and, secondarily, income. Under ordinary conditions, HOVLX invests at least 80% of its total assets in common stocks of established companies.
HOVLX’s 3-year and 5-year annualized returns are 7.7% and 11.6%, respectively. Homestead Valuefund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.64%.
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 7.4% and 10.9%, respectively. Shelton Equity Income Investor 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 >>