Large-cap funds are better than small or mid cap funds for risk-averse investors. These funds have exposure to large-cap stocks, with a long-term performance history and more stability than what mid or small caps offer. Companies with market capitalization of more than $10 billion are generally considered large cap. However, due to their significant international exposure, large-cap companies might be affected by a global downturn.
Meanwhile, investors looking for a bargain — stocks trading at a discount — are mostly interested in in value funds, which pick stocks that tend to trade at a price lower than their fundamentals (i.e. earnings, book value, debt-equity) and pay out dividend. In the long run, value stocks are expected to outperform the growth ones across all asset classes and are less vulnerable to trending markets. However, investors interested in choosing value funds for yield, should check the mutual fund yield as not all value funds comprise solely companies that primarily use their earnings to pay out dividend.
Below we share with you three top-ranked, large-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of large-cap value funds.
American Funds American Mutual Fund Class F-1 (AMFFX - Free Report) invests heavily in common stocks of companies based in the U.S. and Canada. These companies contribute in the growth of the U.S. economy. AMFFX also invests in debt securities and bonds which include those issued by the U.S. government and several federal agencies. The fund seeks growth of income and capital as well as preservation of capital. American Funds American Mutual Fund Class F-1has three-year annualized returns of 8%.
As of June 2017, AMFFX held 224 issues, with 3.28% of its assets invested in Verizon Communications Inc.
Vanguard Equity-Income Fund Investor Shares (VEIPX - Free Report) seeks to provide a high level of income and growth of capital for the long run. VEIPX invests heavily in mid and large-cap equity securities which generally provide above-average dividend income. Companies with growth potential are also considered for investment. Vanguard Equity-Income Fund Investor Shareshas three-year annualized returns of 8.7%.
VEIPX has an expense ratio of 0.26% compared with the category average of 1.04%.
TIAA-CREF Large-Cap Value Fund Premier Class (TRCPX - Free Report) seeks returns over the long run primarily through growth of capital. TRCPX invests the lion’s share of its assets in equity securities of large-cap companies, which are expected to be undervalued. The fund invests in companies as defined by the fund's benchmark Russell 1000 Value Index. TIAA-CREF Large-Cap Value Fund Premier Class has three-year annualized returns of about 6%.
Athanasios (Tom) Kolefas is one of the fund managers of TRCPX since 2004.
To view the Zacks Rank and past performance of all large-cap value mutual funds, investors can click here to see the complete list of funds.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>