4 Large-Cap Value Mutual Funds to Build a Solid Portfolio (2024)

Volatility on Wall Street continues as investors await the Federal Reserve’s interest rate decision, which is expected by the end of this month. A higher-than-expected Consumer Price Index (CPI) data and increased retail sales for the month of December are the key concerns for investors.

Major U.S. indexes like the Dow, the S&P 500 and the tech-heavy NASDAQ have delivered positive returns of 13.4%, 22.6% and 38.7%, respectively over the past year,

CPI for the months of December increased 0.3% and 3.4% year over year, above the street expectation of 0.2% and 3.2% contributed mostly to the rise in shelter costs. Rising inflation numbers suggest that inflation is still a concern for the U.S. economy. The Commerce Department reported on Jan 18, 2023 that the retail sales increased 0.6% in December, more than the 0.4% estimate by the Dow Jones. On a year-over-year basis, retail sales were up 5.6% mostly due to an increase in the sale of clothing and accessory as well as online businesses during the holiday season.

The labor market is still resilient as the economy added 216,000 jobs, the unemployment rate was 3.7%, flat month over month, and the average hourly wage rate increased 0.4% in December. Investors are expecting the central bank to be less hawkish and initiate overnight interest rate cuts this year. However, worries over the Fed officials signals of a more cautious approach to interest rate cuts is a concern. To meet its ambitious 2% inflation target, the Fed can keep the interest rate high for longer. A higher interest rate can impact corporate performance and, thereby, stock prices.

It is prudent for investors who wants capital preservation and generate future returns to take refuge in mutual funds having large-cap value companies as their major holdings. Large-cap stocks are better choices than small or mid-cap stocks for risk-averse investors. These stocks have a long-term performance history and are more stable compared to mid or small caps. Companies with a market capitalization of more than $10 billion are generally considered large caps.

Since the broader market trend is still uncertain, investors should look for stocks that tend to trade at a price lower than their fundamentals. Thus, investors should choose funds with value stocks as they are expected to outperform growth ones once the market begins to recoup from the current downtrend.

We have thus selected four 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 compared to the category average of 0.94%. 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).

BNY Mellon Dynamic Value Fund (DAGVX - Free Report) invests most of its assets along with borrowings, if any, in stocks of companies that have value, sound business fundamentals, and positive business momentum evaluated on extensive quantitative and fundamental research by the portfolio manager. DAGVX also invests a small portion of its net assets in foreign equity securities with similar economic features.

Keith Howell Jr. has been the lead manager of DAGVX since Sep 21, 2021. Most of the fund’s exposure is in companies like Berkshire Hathaway (4.7%), JPMorgan Chase (3.8%) and Danaher (3%) as of Aug 31, 2023.

DAGVX’s three-year and five-year annualized returns are 15.5% and 15.2%, respectively. DAGVX has an annual expense ratio of 0.93%.

To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds,please click here.

TCW Relative Value Dividend Appreciation Fund (TGIGX - Free Report) invests most of its assets along with borrowings, if any, equity securities of dividend-paying companies. TGIGX generally invests in companies that have leaders who efficiently manages environmental sustainability and social responsibilities with good governance and solid financial resources.

Diane E. Jaffee has been the lead manager of TGIGX since Nov 15, 2001. Most of the fund’s exposure is in companies like Broadcom (4.4%), JPMorgan Chase (3.9%) and Wells Fargo (3.6%) as of Jul 31, 2023.

TGIGX’s three-year and five-year annualized returns are 13.4% and 13.9%, respectively. TGIGX has an annual expense ratio of 0.90%.

Vanguard Windsor Fund (VWNDX - Free Report) invests primarily in large and mid-cap companies, which, according to the fund’s advisors, are undervalued. VWNDX advisors consider undervalued stocks that are out of favor among investors and are trading at prices below average earnings and book value.

Richard S. Pzena has been the lead manager of VWNDX since Aug 1, 2012. Most of the fund’s exposure is in companies like Westinghouse Air Brake (2.2%), Pfizer (2.1%) and Alphabet (2.0%) as of Jul 31, 2023.

VWNDX’s three-year and five-year annualized returns are 12.5% and 14.8%, respectively. VWNDX has an annual expense ratio of 0.42%.

Putnam Large Cap Value (PEYAX - Free Report) fund invests primarily in large and mid-cap companies, which, according to the fund’s advisors, are undervalued. PEYAX advisors consider undervalued stocks that are out of favor among investors and are trading at prices below average earnings and book value.

Lauren B. DeMore has been the lead manager of PEYAX since Aug 30, 2019. Most of the fund’s exposure is in companies like Exxon Mobil (3.8%), Microsoft (3.5%) and Walmart (2.9%) as of Oct 31, 2023.

PEYAX’s three-year and five-year annualized returns are 12.4% and 14.3%, respectively. PEYAX has an annual expense ratio of 0.45%.

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