Volatility has returned to Wall Street, with tech stocks taking a beating lately. Tech stocks, which have been responsible for the broader market rally over the past few years, have suddenly raised concerns about their sky-high valuations.
Also, concerns over inflation and uncertainty over the Federal Reserve’s next rate cut have been denting consumer sentiment. This has seen investors dumping riskier assets and taking refuge in safe-haven stocks.
Given the uncertainties, investors may consider large-cap value funds, such as Northern Income Equity NOIEX, Columbia Select Large Cap Value Fund Class A SLVAX and BNY Mellon Dynamic Value Fund DAGVX.
Tech Turmoil Weighs on Wall Street
Tech stocks have come under pressure over the past few weeks. On Monday, the Nasdaq declined 0.8%, while the Dow and the S&P 500 gave up 1.2% and 0.9%, respectively. Tech stocks, particularly those focused on artificial intelligence (AI), have driven markets over the past few years.
Several big companies have announced huge investments in AI in recent times, while many have entered major deals to explore the AI space. However, certain questions have lately raised doubts in investors’ minds.
The sky-high valuations of AI stocks, robust capex plans, and an astounding surge in debt financing have now raised concerns among investors.
Investors are also concerned about inflation, which has been triggered largely by President Donald Trump’s tariffs. Expectations of a rate cut in December have also faded substantially over the past week as the Federal Reserve continues to maintain a hawkish stance. These concerns could keep markets volatile for a longer period.
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 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 20.7% and 1q7.7%, 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.
Columbia Select Large Cap Value Fund Class A fund seeks long-term capital appreciation. SLVAX generally invests at least 80% of its net assets in the common stocks of value companies with a large market capitalization of $2 billion or more. Columbia Select Large Cap Value Fund Class A fund may invest up to 15% of its net assets in illiquid securities and up to 10% of its total assets in foreign securities.
SLVAX’s 3-year and 5-year annualized returns are 10.6% and 12.1%, respectively. Columbia Select Large Cap Value Fund Class A fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.20%, which is lower than the category average.
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 15% and 19.4%, respectively. BNY Mellon Dynamic Value Fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.93%, which is lower than the 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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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
