Major U.S. indexes like the Dow, the S&P 500 and the tech-heavy Nasdaq have returned 17.2%, 24.6% and 29.5%, respectively, over the past year. The Federal Reserve, after its January meeting, announced a pause in interest rate cuts. The current interest rate is in the range of 4.25-4.5%.

The Fed has adopted a wait-and-watch approach to gauge the impact of President Donald Trump’s tax and tariff policies. However, the central bank acknowledged that inflation remains “somewhat elevated" and the labor market shows no sign of deterioration.

Iintensifying trade war between two top economies of the world — the United States and China — is a growing concern. Chinese companies have introduced artificial intelligence (AI) models “DeepSeek” and “Qwen 2.5,” in response to the United States’ rising dominance in AI infrastructure, which is considered a fresh wave of industrial revolution of this era. This came after Trump announced a private sector investment of up to $500 billion to fund infrastructure for AI.

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 (DAGVX Quick QuoteDAGVX - Free Report) , Voya Large Cap Value Portfolio (IPEIX Quick QuoteIPEIX - Free Report) and Vanguard Windsor Fund (VWNDX Quick QuoteVWNDX - 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 the 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 of less than 1%. 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).

Our Picks

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 on extensive quantitative and fundamental research by the portfolio manager. DAGVX also invests a small portion of its net assets in foreign equity securities with similar economic features.

Keith Howell Jr. has been the lead manager of DAGVX since Sept. 21, 2021. Most of the fund’s exposure is in companies like Berkshire Hathaway (4.9%), JPMorgan Chase (3.6%) and Cisco Systems (3.3%) as of Aug. 31, 2024.

DAGVX’s three-year and five-year annualized returns are 10.2% and 13.11%, respectively. DAGVX has an annual expense ratio of 0.93%.

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

Voya Large Cap Value Portfolio invests most of its assets, along with borrowings, if any, in a portfolio of large-cap dividend-paying equity securities. IPEIX advisors consider large-cap companies as those with market capitalization within the range of companies listed on the Russell 1000 Value Index at the time of purchase

Vincent J. Costa has been the lead manager of IPEIX since June 30, 2013. Most of the fund’s exposure is in companies like Bank of America (4.1%), AT&T (3.2%), and UnitedHealth Group (2.8%) as of Sept. 30, 2024.

IPEIX’s three-year and five-year annualized returns are 8.8% and 11.7%, respectively. IPEIX has an annual expense ratio of 0.66%.

Vanguard Windsor Fund invests primarily in large and mid-cap companies, which, according to the fund’s advisors, are undervalued. VWNDX advisors consider undervalued stocks that are out of favor among investors and are trading at prices below average earnings and book value.

Richard S. Pzena has been the lead manager of VWNDX since Aug. 2, 2012. Most of the fund’s exposure is in companies like Pfizer (2%), Edison International (2%) and Morgan Stanley (1.9%) as of July 31, 2024.

VWNDX’s three-year and five-year annualized returns are 7% and 11%, respectively. VWNDX has an annual expense ratio of 0.42%.

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