Major U.S. indexes like the Dow, the S&P 500 and the tech-heavy Nasdaq have returned 12.8%, 21.5% and 21.8%, respectively, so far this year. The current macroeconomic situation is more investor and Federal Reserve-friendly. Moderating inflation in recent months, stronger-than-expected consumer spending and a resilient labor market have eased fears of a weakening economy.

The central bank’s half-percentage-point cut last month has brought down the borrowing cost to the range of 4.75-5.00% and market participants are expecting a smaller 25-basis-point reduction in interest rate in next two weeks. However, economic growth and inflation remain the key issues for investors ahead of the U.S. presidential election.          

Thus, risk-averse investors who seek returns subject to low risk may opt for large-cap value mutual funds like BNY Mellon Dynamic Value Fund (DRGVX Quick QuoteDRGVX - Free Report) , AB Large Cap Value (ABVAX Quick QuoteABVAX - Free Report) and JPMorgan Large Cap Value Fund (JLVRX Quick QuoteJLVRX - Free Report) as their major holdingsto achieve their objective.

Why Invest in Large-Cap Value Mutual Funds?

While mutual funds investing in value stocks have the potential to deliver higher returns and exhibit lower volatility compared to growth and blend counterparts, large-cap funds usually provide a safer option than small-cap or mid-cap funds. Thus, investors may look for large-cap value funds to earn in a moderate return volatile environment.

Value funds generally invest in stocks that tend to trade at a price lower than their fundamentals (i.e., earnings, book value, debt-equity) and pay out dividends. Value stocks are expected to outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets.

Meanwhile, large-cap funds have exposure to large-cap stocks that are expected to provide long-term performance history and assure more stability than what mid or small-caps offer. Companies with a market capitalization of more than $10 billion are generally considered large caps. However, due to their significant international exposure, large-cap companies might be affected by a global downturn.

We have thus selected three large-cap value mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

BNY Mellon Dynamic Value Fund invests most of its assets, along with borrowings, if any, in stocks of companies that have value, sound business fundamentals, and positive business momentum evaluated based on extensive quantitative and fundamental research by the portfolio manager. DRGVX also invests a small portion of its net assets in foreign equity securities with similar economic features.

Brian Ferguson has been the lead manager of DRGVX since Sept. 30, 2003. Most of the fund’s exposure is in companies like JPMorgan Chase (4.3%), Berkshire Hathaway (4.0%) and Danaher (2.8%) as of May 31, 2024.

DRGVX’s three-year and five-year annualized returns are 14.4% and 15.6%, respectively. DRGVX has an annual expense ratio of 0.68%.

To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

AB Large Cap Value fund invests most of its assets, along with borrowings, if any, ina diversified portfolio of equity securities of large-cap companies. ABVAX advisors invest in companies that are undervalued, using their own fundamental value approach.

Cem Inal has been the lead manager of ABVAX since March 7, 2016. Most of the fund’s exposure is in companies like Walmart (4.2%), Wells Fargo (3.7%) and Progressive (3.4%) as of May 31, 2024.

ABVAX’s three-year and five-year annualized returns are 11.4% and 11.9%, respectively. ABVAX has an annual expense ratio of 0.94%.

JPMorgan Large Cap Value Fund invests most of its assets, along with borrowings, if any, insecurities of large-cap companies, including common stocks, debt and preferred stocks, which are convertible to common stocks. JLVRX invests in stocks with market capitalization like the one listed on the Russell 1000 Value Index at the time of investment.

Scott Blasdell has been the lead manager of JLVRX since April 4, 2013. Most of the fund’s exposure is in companies like Exxon Mobil (4.0%), Chevron (3.3%) and Berkshire Hathaway (3.0%) as of June 30, 2024.

JLVRX’s three-year and five-year annualized returns are nearly 11.3% and 14.2%, respectively. JLVRXhas an annual expense ratio of 0.54%.

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