Major U.S. indexes, including the S&P 500, the tech-heavy Nasdaq, and the Dow Jones Industrial Average, have gained 3.6%, 3.4%, and 1%, respectively, so far this year. Market participants have adopted cautious optimism despite mixed economic data, persistent concerns about inflation, uncertainties over trade policies, geopolitical tensions, and the Federal Reserve's hawkish stance on interest rates.

Investors are still concerned about the impact of President Trump’s aggressive tariff policies. Federal Reserve Chairman Jerome Powell stated that the Fed is in no rush to cut interest rates and prefers to wait and see how Trump’s tariffs affect the economy. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) have increased by 0.1% for the month of May. On a year-on-year basis, the CPI rose by 2.4%, whereas the PPI advanced 2.6% inching toward the Fed's 2.0% inflation target.

The ISM Manufacturing Index and Services Index dropped to 48.5% and 49.9% in May. Any reading below 50% indicates a contraction. The labor market added 139,000 jobs in May, down from 193,000 a year ago. The unemployment rate held steady at 4.2% whereas average hourly earnings rose 0.4%.

Tensions flared up in the Middle East after Iran's parliament voted to close the Strait of Hormuz, a key route for about one-fifth of the world's oil and gas supply. This could further cause inflation to tick up and impact the global supply chain.

Amid such volatile market conditions, risk-averse investors who seek returns subject to low risk may opt for large-cap value mutual funds, such as Putnam Large Cap Value Fund (PEIYX Quick QuotePEIYX - Free Report) , Tcw Relative Value Large Cap Fund (TGDIX Quick QuoteTGDIX - Free Report) and BNY Mellon Dynamic Value Fund (DRGVX Quick QuoteDRGVX - Free Report) as their major holdings to 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 a 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 that offer the potential for capital growth, current income, or both. PEIYX 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 PEIYX since Aug. 29, 2012. Most of the fund’s exposure is in companies like Citigroup (3.4%), Walmart (3.1%) and Bank of America Corporation (2.8%) as of Jan. 31, 2025.

PEIYX’s three-year and five-year annualized returns are 12.1% and 16.3%, respectively. PEIYX has an annual expense ratio of 0.63%.

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

Tcw Relative Value Large Cap Fund invests most of its assets, along with borrowings, if any, inequity securities of large-capitalization companies. TGDIX advisors consider large-cap companies as those with market capitalization similar to the companies listed on the Russell 1000 Index at the time of purchase.

Diane E. Jaffee has been the lead manager of TGDIX since Feb. 28, 1999. Most of the fund’s exposure is in companies like International Business Machines (4.9%), JPMorgan Chase (4.4%) and Broadcom (3.5%) as of Jan. 31, 2025.

TGDIX’s three-year and five-year annualized returns are 11.8% and 17%, respectively. TGDIX has an annual expense ratio of 0.70%.

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. DRGVX 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 DRGVX 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 (3.5%) as of Feb. 28, 2025.

DRGVX’s three-year and five-year annualized returns are 11.6% and 19.1%, respectively. DRGVX has an annual expense ratio of 0.68%.

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