Wall Street saw two volatile sessions last week, with major indexes retreating from their all-time highs achieved earlier in the week. Concerns over the timing of the next interest rate cut and the uncertainty over the impact of President Donald Trump’s tariffs have weighed heavily on consumer sentiment.

In July, sentiment declined while inflation expectations increased due to these factors.

Given the uncertainty, investors may want to consider investing in large-cap value funds for safety. Three such funds are: Northern Income Equity (NOIEX Quick QuoteNOIEX - Free Report) , VALIC Company I Systematic Value Fund (VBCVX Quick QuoteVBCVX - Free Report) and Shelton Equity Income Investor (EQTIX Quick QuoteEQTIX - Free Report) .

Consumer Sentiment Weakens Further

The University of Michigan’s preliminary consumer sentiment index fell to 58.6 in July from 61.7 in June, falling short of analysts’ forecasts of 62. Buying conditions fell 14%, hitting at their lowest level in a year.

The survey also shows that households expect prices to climb because of tariffs, further hurting sentiment. Short-term inflation expectations rose, with the one-year outlook moving up to 4.9% in July from 4.5% in June, while the five-year outlook increased to 3.9% from 3.4%.

Over the past few months, stocks rallied, with the Dow, the S&P 500, and the Nasdaq notching several record highs, driven by optimism after Trump temporarily paused tariffs and the White House began trade talks aimed at fairer deals. Investors initially believed that the tariff impact would be smaller than feared, but prices surged once new tariffs took effect. With the tariff deadline expiring on Aug. 7, consumers are bracing for further price increases.

Meanwhile, expectations of a July rate cut were dashed as the Federal Reserve kept interest rates steady in the 4.25-4.5% range, adopting a cautious stance while assessing tariff-driven inflation. Investors now expect a 25-basis-point cut in September, though the Fed has yet to signal such a move. These lingering uncertainties could keep the markets choppy for an extended period.

3 Best Choices

We've identified three large-cap value mutual funds that have given 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.

NOIEX’s 3-year and 5-year annualized returns are 16% and 15.9%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%, which is lower than its category average.

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 in 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 11.9% and 14.3%, respectively. VALIC Company I Systematic Value Fundhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.54, which is lower than its category average.

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

Shelton Equity Income Investor fund seeks to achieve a high level of income and capital appreciation by investing primarily in income-producing U.S. equity securities. EQTIX invests primarily in securities that generate a relatively high level of dividend income and have the potential for capital appreciation. Shelton Equity Income Investor fund also invests at least 80% of its total assets in stocks.

EQTIX’s 3-year and 5-year annualized returns are 12.5% and 12.4%, respectively. Shelton Equity Income Investor fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.65%, which is lower than its category average.

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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