3 Large-Cap Value Funds to Play Safe as Consumer Confidence Ebbs

Americans are not as optimistic about the economy as they were till a few months ago. Since the start of the year, markets have been volatile due to renewed concerns over inflation, leading the Federal Reserve to take a cautious stance and halt its rate cuts.Donald Trump’s victory in the U.S. presidential election initially boosted economic and market sentiment, sparking a stock rally in late 2024. However, enthusiasm has waned in 2025 as persistent inflation coupled with fears of a trade war with partner nations have gripped markets.It would thus be safe to invest in large-cap value funds. We suggest investing in three large-cap value funds, namely, VALIC Company I Systematic Value Fund VBCVX, BNY Mellon Dynamic Value Fund DAGVX and Northern Income Equity NOIEX.Consumer Confidence EbbsThe Conference Board reported last week that the consumer confidence index fell to 104.1 in January, down from a revised 109.5 in December. This was below the consensus estimate of 105.6. This came just days after the University of Michigan’s Consumer Sentiment Index showed a reading of 71.1 in January, marking a 3.9% decline from December’s 74 and a 10% drop compared to the previous year.Weaker confidence stemmed from declining optimism about labor market conditions and business prospects. Although Trump’s election led to record highs across major stock indexes, market momentum slowed by late December after reports indicated rising inflation. Also, Labor Department data highlighted continued job growth, signaling a strong labor market.Federal Reserve Maintains Cautious ApproachFollowing its December FOMC meeting, the Federal Reserve struck a hawkish tone, suggesting fewer rate cuts in 2025 due to the economy’s resilience. On Wednesday, the Fed concluded its two-day policy meeting by keeping the benchmark rate steady at 4.25-4.5%, following three consecutive rate cuts totaling 100 basis points since September.While inflation has dropped significantly over the past year, it remains above the Fed’s 2% target. Investors worry that slower rate cuts could prolong inflationary pressures and keep borrowing costs elevated, further weighing on economic sentiment.Volatility escalated further this week on fears of an impending trade war. Trump had vowed to impose tariffs on its biggest trade partners Canada, Mexico and China before assuming office. Last week, Trump announced 25% tariffs on Canadian and Mexican goods and a 10% tariff on Chinese imports.Although the tariffs on Canada and Mexico have been temporarily paused for a month after negotiations, the 10% tariff on Chinese goods came into effect on Tuesday. China, too, has announced retaliatory tariffs. The ongoing uncertainty could keep markets volatile for a longer period as it could further dampen consumer confidence.3 Best ChoicesWe've identified three large-cap value mutual funds that have demonstrated 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).VALIC Company I Systematic Value Fund primarily invests in equity securities of U.S. large- and mid-cap companies, selected on their inclusion on 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 6.6% and 9%, respectively. VALIC Company I Systematic Value Fundhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49.To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.BNY Mellon Dynamic Value Fund seeks capital appreciation. DAGVX invests at least 80% of its assets in stocks. BNY Mellon Dynamic Value Fund invests in companies of any size, and uses a value approach in selecting stocks for investment.DAGVX’s 3-year and 5-year annualized returns are 10.2% and 13.1%, respectively. BNY Mellon Dynamic Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.93.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. In pursuing its objective, the Northern Income Equity fund invests at least 65% of its total assets in a mix of income-producing equity securities, with no limit on the fund's ability to invest in non-investment grade fixed income and convertible debt securities.NOIEX’s 3-year and 5-year annualized returns are 8.9% and 12.9%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%.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 >>5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (DAGVX): Fund Analysis Report Get Your Free (VBCVX): Fund Analysis Report Get Your Free (NOIEX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks