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3 Large-Cap Value Funds to Buy on Shrinking Consumer Sentiment
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Stocks have been rallying after a couple of weeks of volatility on expectations that the Federal Reserve will finally cut interest rates this week. However, consumer sentiment is still down as uncertainty over the economy’s health continues.
Weak jobs data has further dented consumer sentiment. The University of Michigan's Surveys of Consumers last week showed that consumer sentiment declined further in September.
Given the uncertainty, investors may want to consider investing in large-cap value funds for safety. Three such funds are: Northern Income Equity (NOIEX - Free Report) , Vanguard Equity Income Fund (VEIPX - Free Report) and Shelton Equity Income Investor (EQTIX - Free Report) .
Consumer Sentiment Plummets Further
The University of Michigan’s preliminary consumer sentiment index dropped to 55.4 in September from August’s final reading of 58.2. This was sharply lower than economists’ expectations of a reading of 58 and the lowest level since May.
The survey’s short-term inflation expectations remained unchanged at 4.8%. However, the five-year, or long-term, inflation index rose to 3.9% in September from 3.5% in August. Multiple factors have been denting consumer sentiment.
Households have been concerned about President Donald Trump’s tariffs, which they believe will push prices of goods and weaken their purchasing power. Also, fresh data suggests that the labor market is struggling, with job additions to the economy shrinking over the past few months.
Inflation has somewhat eased and has not jumped as much as it was believed due to Trump’s new tariff measures. This has raised hopes of an interest rate cut by the Federal Reserve in its policy meeting on Wednesday. Markets are pricing in a 96.1% chance of a quarter percentage point rate cut by the Fed, according to CME’s FedWatch tool. However, volatility may continue in the markets as long as consumers don’t get a clearer picture of the nation’s economy.
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 its secondary objective being long-term capital appreciation. 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.
Vanguard Equity Income Fund seeks a high level of dividend income and long-term growth of income and capital. VEIPX invests in a diversified group of large and mid-capitalization stocks with above-average dividend yields and reasonable prospects for long-term price appreciation.
VEIPX’s 3-year and 5-year annualized returns are 13.4% and 14%, respectively. Vanguard Equity Income Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.27%, 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 14.4% and 12.3%, 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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3 Large-Cap Value Funds to Buy on Shrinking Consumer Sentiment
Stocks have been rallying after a couple of weeks of volatility on expectations that the Federal Reserve will finally cut interest rates this week. However, consumer sentiment is still down as uncertainty over the economy’s health continues.
Weak jobs data has further dented consumer sentiment. The University of Michigan's Surveys of Consumers last week showed that consumer sentiment declined further in September.
Given the uncertainty, investors may want to consider investing in large-cap value funds for safety. Three such funds are: Northern Income Equity (NOIEX - Free Report) , Vanguard Equity Income Fund (VEIPX - Free Report) and Shelton Equity Income Investor (EQTIX - Free Report) .
Consumer Sentiment Plummets Further
The University of Michigan’s preliminary consumer sentiment index dropped to 55.4 in September from August’s final reading of 58.2. This was sharply lower than economists’ expectations of a reading of 58 and the lowest level since May.
The survey’s short-term inflation expectations remained unchanged at 4.8%. However, the five-year, or long-term, inflation index rose to 3.9% in September from 3.5% in August. Multiple factors have been denting consumer sentiment.
Households have been concerned about President Donald Trump’s tariffs, which they believe will push prices of goods and weaken their purchasing power. Also, fresh data suggests that the labor market is struggling, with job additions to the economy shrinking over the past few months.
Inflation has somewhat eased and has not jumped as much as it was believed due to Trump’s new tariff measures. This has raised hopes of an interest rate cut by the Federal Reserve in its policy meeting on Wednesday. Markets are pricing in a 96.1% chance of a quarter percentage point rate cut by the Fed, according to CME’s FedWatch tool. However, volatility may continue in the markets as long as consumers don’t get a clearer picture of the nation’s economy.
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 its secondary objective being long-term capital appreciation. 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.
Vanguard Equity Income Fund seeks a high level of dividend income and long-term growth of income and capital. VEIPX invests in a diversified group of large and mid-capitalization stocks with above-average dividend yields and reasonable prospects for long-term price appreciation.
VEIPX’s 3-year and 5-year annualized returns are 13.4% and 14%, respectively. Vanguard Equity Income Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.27%, 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 14.4% and 12.3%, 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.
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 >>