Major U.S. indexes like the S&P 500, the tech-heavy Nasdaq, and the Dow Jones Industrial Average have slumped 10.4%, 15.1%, and 6.9%, respectively, so far this year. Investors are still concerned about the impact of the global trade war led by President Trump’s aggressive tariff policies. However, Trump's announcement of a temporary 90-day pause on reciprocal tariffs in most countries has given investors time to rethink their strategies.

The consumer price index eased by 0.1% in March. On a year-on-year basis, CPI inflation rose 2.4%, down from 2.8% in February. With so much policy uncertainty stemming from the federal government, market participants expect the Federal Reserve to wait till June before further lowering of interest rates. New trade policies could lead to a widespread rise in prices, which could further spike the inflation rates temporarily. The Fed’s primary objective is to encourage price stability and maximize employment. Though the March nonfarm payrolls report indicates a slight increase in unemployment to 4.2%, the rise of 228,000 jobs was more than street expectations.

Amid such volatile market conditions, risk-averse investors who seek returns subject to low risk may opt for large-cap value mutual funds like Putnam Large Cap Value Fund (PEQSX Quick QuotePEQSX - Free Report) , BNY Mellon Dynamic Value Fund (DAGVX Quick QuoteDAGVX - Free Report) and AB Large Cap Value (ABVIX Quick QuoteABVIX - 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 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

Putnam Large Cap Value Fund invests primarily in common stocks of domestic companies which offer the potential for capital growth, current income, or both. PEQSX advisors choose to invest in stocks based on valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends.

Darren Jaroch has been the lead manager of PEQSX since Aug. 29, 2012. Most of the fund’s exposure is in companies like Walmart (3.1%), Exxon Mobil (3%) and AbbVie (2.9%) as of Oct. 31, 2024.

PEQSX’s three-year and five-year annualized returns are 13.1% and 16.5%, respectively. PEQSX has an annual expense ratio of 0.54%.

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

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 (4.1%), Cisco Systems (3.4%) and Bank of America Corporation (3.2%) as of Nov. 30, 2024.

DAGVX’s three-year and five-year annualized returns are 12.5% and 17.8%, respectively. DAGVX has an annual expense ratio of 0.93%.

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. ABVIX advisors invest in companies that are undervalued, using their own fundamental value approach.

Cem Inal has been the lead manager of ABVIX since March 7, 2016. Most of the fund’s exposure is in companies like Walmart (4.1%), Wells Fargo (4.1%) and UnitedHealth Group (4%) as of Nov. 30, 2024.

ABVIX’s three-year and five-year annualized returns are 11.7% and 14.8%, respectively. ABVIX has an annual expense ratio of 0.70%.

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