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3 Large-Cap Value Funds to Buy as Fed Holds Interest Rate Steady
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The Federal Reserve kept interest rates unchanged in its June policy meeting on Wednesday. That didn’t come as a surprise, but the Fed signaled a rate cut later this year as it grapples to tame inflation that has been on the rise over the past three months.
Higher interest rates could further weigh on the economy and keep markets volatile for a longer period. Given this backdrop, investors may consider investing in large-cap value funds, such as American Funds American Mutual A (AMRMX - Free Report) , Vanguard Equity Income Fund (VEIPX - Free Report) and Northern Income Equity (NOIEX - Free Report) .
Fed Hints at Rate Hikes
The Federal Reserve held interest rates steady in its current range of 3.5-3.75% at the end of the Federal Open Market Committee’s meeting. The decision was highly anticipated. This was Kevin Warsh’s first meeting as Chairman of the Federal Reserve.
The meeting brought a major shift in the Fed’s messaging, as officials removed language that had previously suggested a preference for additional rate cuts. However, policymakers signaled that rate hikes could be considered in the future.
The central bank has kept interest rates unchanged this year after slashing rates by 75 basis points at the end of 2025. Inflation has been a major challenge for the Federal Reserve. Inflation fell sharply in 2025, but the Iran war that started at the end of February saw oil prices surging to record highs, pushing up inflation.
The Consumer Price Index rose 0.5% in May, following a 0.6% jump in April. The Fed’s inflation target of 2% has now become a difficult goal, and another hike could further weigh on consumers, who have already been cutting down on their spending.
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).
American Funds American Mutual A fund seeks to provide a balance of three objectives: current income, capital growth and conservation of principal. AMRMX invests primarily in common stocks, securities convertible into common stocks, non-convertible preferred stocks, U.S. government securities, bonds rated A or better and cash.
AMRMX’s 3-year and 5-year annualized returns are 16.2% and 10.3%, respectively. American Funds American Mutual Afund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.57%.
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 18.4% and 11.1%, respectively. Vanguard Equity Income Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.26%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 23.8% and 14.3%, 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.
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3 Large-Cap Value Funds to Buy as Fed Holds Interest Rate Steady
The Federal Reserve kept interest rates unchanged in its June policy meeting on Wednesday. That didn’t come as a surprise, but the Fed signaled a rate cut later this year as it grapples to tame inflation that has been on the rise over the past three months.
Higher interest rates could further weigh on the economy and keep markets volatile for a longer period. Given this backdrop, investors may consider investing in large-cap value funds, such as American Funds American Mutual A (AMRMX - Free Report) , Vanguard Equity Income Fund (VEIPX - Free Report) and Northern Income Equity (NOIEX - Free Report) .
Fed Hints at Rate Hikes
The Federal Reserve held interest rates steady in its current range of 3.5-3.75% at the end of the Federal Open Market Committee’s meeting. The decision was highly anticipated. This was Kevin Warsh’s first meeting as Chairman of the Federal Reserve.
The meeting brought a major shift in the Fed’s messaging, as officials removed language that had previously suggested a preference for additional rate cuts. However, policymakers signaled that rate hikes could be considered in the future.
The central bank has kept interest rates unchanged this year after slashing rates by 75 basis points at the end of 2025. Inflation has been a major challenge for the Federal Reserve. Inflation fell sharply in 2025, but the Iran war that started at the end of February saw oil prices surging to record highs, pushing up inflation.
The Consumer Price Index rose 0.5% in May, following a 0.6% jump in April. The Fed’s inflation target of 2% has now become a difficult goal, and another hike could further weigh on consumers, who have already been cutting down on their spending.
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).
American Funds American Mutual A fund seeks to provide a balance of three objectives: current income, capital growth and conservation of principal. AMRMX invests primarily in common stocks, securities convertible into common stocks, non-convertible preferred stocks, U.S. government securities, bonds rated A or better and cash.
AMRMX’s 3-year and 5-year annualized returns are 16.2% and 10.3%, respectively. American Funds American Mutual Afund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.57%.
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 18.4% and 11.1%, respectively. Vanguard Equity Income Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.26%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 23.8% and 14.3%, 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.
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 >>