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Major U.S. indexes like the Dow, the S&P 500 and the tech-heavy Nasdaq have returned 12.3%, 23% and 29.1%, respectively, so far this year. The Federal Reserve, in its December meeting, slashed the key interest rate by 25 basis points, in line with market expectations, thereby easing the interest rate burden on citizens and corporations. However, investors are concerned about the U.S.-China trade war and mixed economic data.
Bạn đang xem: 3 Large-Cap Value Mutual Funds to Buy for 2025 & Beyond
As inflation is in an acceptable range, the Fed reduced interest rates for the third time before the end of 2024 to support a weakening labor market and stimulate economic growth. The Fed projected two rate cuts next year. Currently, the overnight borrowing rate is in the range of 4.25-4.5%, a level last seen in December 2022.
The consumer price index (CPI) accelerated for the second straight month in November by 0.3%, the steepest gain in the last seven months. On a year-over-year basis, CPI rose 3.3% compared with a 2.6% rise in October. The labor market is showing signs of cooling as the unemployment rate rose to 4.2%. According to Labour Department data the number of Americans filing for unemployment benefits rose unexpectedly at the end of November compared to the beginning of the year.
Investors are hopeful that the Fed will be able to achieve a soft landing for the economy despite lack of progress in the fight to control inflation. 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 DRGVX, JPMorgan Large Cap Value Fund JLVRX and AB Large Cap Value ABVIX as their major holdings to 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 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.
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Danh mục: News
