Wall Street hasn’t had an impressive year so far, with all three major indexes retreating from their previous highs as inflation continues to rise. The euphoria surrounding President Donald Trump’s return to the White House in mid-January has also fizzled, with new tensions of a global trade war mounting following the announcement of hefty tariffs.

Given the uncertainty in markets that is expected to exist for a prolonged period, investing in large-cap value funds appears to be a safe bet. We suggest investing in three large-cap value funds, namely, Northern Income Equity (NOIEX Quick QuoteNOIEX - Free Report) , Putnam Large Cap Value A (PEYAX Quick QuotePEYAX - Free Report) and VALIC Company I Systematic Value Fund (VBCVX Quick QuoteVBCVX - Free Report) .

Indexes Retreat on Trade War Fears

Volatility has returned to Wall Street, with all three major indexes posting their worst week since September last week. The Dow and the S&P 500 ended the week 2.4% and 3.1% lower, respectively. The tech-heavy Nasdaq fell 3.5% on the week and entered correction territory.

Inflation has been increasing over the past few months, raising concerns over a slowing economy. The Federal Reserve also left interest rates unchanged in its January policy meeting after slashing rates by 100 basis points. The Federal Reserve is expected to adopt a cautious approach until inflation shows signs of cooling before going for its next rate cut.

To make matters worse, hefty tariffs on the nation’s biggest trading partners announced by Trump since his return to the White House have further ignited fears of slowing economic growth in the future.

Trump has announced 25% tariffs on imports from Canada and Mexico before temporarily pausing them. However, he has already slapped 10% tariffs on Chinese goods and plans to target the European Union with similarly hefty tariffs, sparking fears of a widescale trade war. This could keep markets volatile for a longer period.

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 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 11.3% and 14%, 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.

Putnam Large Cap Value A fund seeks current income. Capital growth is a secondary objective when consistent with seeking current income. PEYAX invests mainly in common stocks of U.S. companies, with a focus on value stocks that offer the potential for current income and for capital growth.

PEYAX’s 3-year and 5-year annualized returns are 12.4% and 13.9%, respectively. Putnam Large Cap Value A fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88%.

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

VALIC Company I Systematic Value Fund primarily invests in equity securities of U.S. large- and mid-cap companies, selected on their inclusion on the Russell 1000 Value Index, which identifies companies with value characteristics such as lower price-to-book ratios and lower expected growth values.

VBCVX’s 3-year and 5-year annualized returns are 9.1% and 10.3%, respectively. VALIC Company I Systematic Value Fundhas 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.

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