Markets

3 Large-Cap Funds to Buy as Wall Street Reaches Record Highs

Mutual fund investors, who wish to make the best of Wall Street’s climb to record highs, could turn their attention to funds that invest in large-capitalization companies. There are solid reasons to do that right now.

First, certain significant developments on the U.S.-China trade front indicate the possibility of the phase one deal by the end of this year. In addition, a string of mergers and acquisitions have also been instrumental in inducing optimism into Wall Street. Let us, therefore, consider a few such mutual funds.

Fresh Hopes for U.S.-China Trade Deal in 2019

Wall Street has scaled new heights this week, thanks to some progress in the U.S.-China trade relationship. First, U.S. national security advisor Robert O’Brien’s remarks on Nov 23 that a phase one trade deal with China could be approved before the end of 2019 boosted markets.

In fact, China also returned the optimistic tone on trade remarks on Sunday by promising more protection to intellectual property rights, which is a crucial issue in trade negotiations between the United States and China. This renewed hopes in Wall Street after investors were left disappointed last week.

Considering that a phase one agreement is indeed successful, some of the imposed tariffs could be eliminated. This puts large-capitalization companies on the forefront for gains as mostly the products and services of these companies are subject to tariffs at present.

In addition, Trump may decide not to impose the next batch of scheduled tariffs on Dec 15 after all. Since the existing tariffs have diminished corporate profit margins and slowed global growth, companies would definitely benefit from the overall tariff relief.

Mergers & Acquisitions to Push Wall Street Higher

Apart from the new-found optimism around trade talks, much activity on the front of mergers and acquisitions (M&A) also promises to boost the financial markets in days to come.

A number of top-notch companies entered into M&As this week, for example, LVMH Moët Hennessy Louis Vuitton SE (LVMH), the world's biggest luxury goods company confirmed on Nov 25 that it was purchasingTiffany & Co. in a bid of $16.2 billion. LVMH will acquire the American jeweler for $135 per share in cash.

Novartis AG also recently announced the acquisition of The Medicines Company for $85 per share in an all-cash transaction. This brings the deal to a fully diluted equity value of $9.7 billion. Apart from these, Charles Schwab is also acquiring TD Ameritrade in a $26 billion all-stock deal.The acquisition is expected to conclude in the second half of 2020.

Our Choices

We have, therefore, selected three top mutual funds that invest in large-capitalization organizations. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. In addition, the minimum initial investment is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

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).

MFS Value Fund Class A MEIAX aims for capital growth. MEIAX usually invests its assets in equity securities. The fund focuses on investing in large-capitalization, high-quality, attractively valued companies.

This Zacks sector – Large-Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MEIAX has an annual expense ratio of 0.83%, which is below the category average of 1.00%. It has returned 22.2% on a year-to-date basis. MEIAX has a minimum initial investment of $1000.

Northern Large Cap Value Fund NOLVX invests the majority of its assets in equity securities of large-capitalization companies based in the United States. Large capitalization companies are usually considered to be those whose market capitalization at the time of purchasing the fund is within the range of the market capitalization of the companies on the Russell 1000 Value Index. NOLVX seeks long-term growth of capital.

This Zacks sector – Large-Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

NOLVX has an annual expense ratio of 0.58%, which is below the category average of 1.00%. It has returned 18.9% on a year-to-date basis. NOLVX has a minimum initial investment of $2500.

AB Large Cap Growth Fund Class A APGAX aims for long-term capital appreciation. The fund invests the majority of its assets in equity securities of large-capitalization American companies. APGAX mostly invests in common stocks of companies.

This Zacks sector – Large-Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

APGAX has an annual expense ratio of 0.89%, which is below the category average of 1.07%. It has returned 25.7% on a year-to-date basis. APGAX has a minimum initial investment of $2500.

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 >>


Click to get this free report

Get Your Free (NOLVX): Fund Analysis Report

Get Your Free (MEIAX): Fund Analysis Report

Get Your Free (APGAX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Mutual Funds

Latest Markets Videos