Major U.S. indexes like the Dow, the S&P 500 and the tech-heavy Nasdaq have returned 17.2%, 24.6% and 29.5%, respectively, over the past year. The Federal Reserve, after its January meeting, announced a pause in interest rate cuts. The current interest rate is in the range of 4.25-4.5%.
The Fed has adopted a wait-and-watch approach to gauge the impact of President Donald Trump’s tax and tariff policies. However, the central bank acknowledged that inflation remains “somewhat elevated” and the labor market shows no sign of deterioration.
Iintensifying trade war between two top economies of the world — the United States and China — is a growing concern. Chinese companies have introduced artificial intelligence (AI) models “DeepSeek” and “Qwen 2.5,” in response to the United States’ rising dominance in AI infrastructure, which is considered a fresh wave of industrial revolution of this era. This came after Trump announced a private sector investment of up to $500 billion to fund infrastructure for AI.
Thus, risk-averse investors who seek returns subject to low risk may opt for large-cap value mutual funds like BNY Mellon Dynamic Value Fund DAGVX, Voya Large Cap Value Portfolio IPEIX and Vanguard Windsor Fund VWNDX as their major holdingsto achieve their objective.
While mutual funds investing in value stocks have the potential to deliver higher returns and exhibit lower volatility compared to growth and blend counterparts, large-cap funds usually provide a safer option than small-cap or mid-cap funds. Thus, investors may look for large-cap value funds to earn in a moderate-return, volatile environment.
Value funds generally invest in stocks that tend to trade at a price lower than their fundamentals (i.e., earnings, book value, debt-equity) and pay out dividends. Value stocks are expected to outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to the trending markets.
Meanwhile, large-cap funds have exposure to large-cap stocks that are expected to provide long-term performance history and assure more stability than what mid or small-caps offer. Companies with a market capitalization of more than $10 billion are generally considered large caps. However, due to their significant international exposure, large-cap companies might be affected by a global downturn.
We have thus selected three large-cap value mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, and carry a low expense ratio of less than 1%. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).