Job additions to the economy have slowed drastically and job openings are narrowing. Also, inflation, despite declining sharply over the past year, remains elevated, which has made the Fed maintain its hawkish stance and open for more interest rate hikes.

This has been denting consumer confidence lately. Americans, who were a lot more confident in July, suddenly seem worried about the economy’s health. Consequently, consumer confidence took a hit in August.

Consumer Confidence Gets Dented

Investor confidence has been waning due to a slowing economy and sky-high inflation. The confidence level among Americans, which was high till July, saw a sharp decline in August.

Consumer confidence fell to 106.1 in August from July’s revised reading of 114, which also missed the consensus estimate of a reading of 116, the Conference Board said on Aug 29.

Moreover, consumers’ assessment of business prospects also declined sharply, a clear sign that people are growing concerned about an impending economic downturn.

In August, the evaluation of current economic conditions by consumers dropped to 114.8 from the previous month’s reading of 153. Also, their outlook on economic conditions for the next six months deteriorated to 80.2 in August from 88 in July.

The labor market is finally cooling. The ADP’s (ADP) National Employment report released on Aug 30 shows private-sector payrolls increased by 177,000 in August, sharply lower than July’s revised figures of 371,000.

The ADP report follows the JOLTS report that showed job openings in the United States fell to 8.8 million in July, missing economists estimates of 9.5 million.

Although markets rebounded in the last week of August after a volatile month as investors are optimistic that the Fed might keep interest rates unchanged in its September meeting, the crisis is far from over.

Inflation remains elevated and a lot higher than the Federal Reserve’s target of 2%, which has made officials remain hawkish. Fed Chair Jerome Powell, in his speech at Jackson Hole, hinted at more interest rate hikes to tame inflation.

The central bank has already raised interest rates by 525 points since March 2022 and more rate hikes will make borrowing even more expensive. Also, it is unlikely that the first cut in interest rates will come anytime before 2025.

An astute investor should thus bet on large-cap value funds in order to minimize risk. Large-cap equities have a proven track of success and are more reliable than mid- or small-cap stocks.

Also, value funds, which comprise stocks typically trading below their fundamental metrics like earnings, book value, and debt-to-equity ratios, along with dividend payments, are preferred by investors looking for favorable investment opportunities.

3 Best Choices

We’ve identified three such large-cap value mutual funds that have demonstrated impressive annualized returns over both 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).

ClearBridge Large Cap Value Fund SAIFX seeks long-term growth of capital. Current income is the secondary objective. SAIFX invests in common stocks of established U.S. companies. ClearBridge Large Cap Value Fund may also invest in other equity securities and debt securities.

SAIFX’s 3-year and 5-year annualized returns are 14.4% and 9.6%, respectively. ClearBridge Large Cap Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.54%, which is below the category average of 0.94%.

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

Goldman Sachs Focused Value Fund GFVSX invests 80% of its net assets, including any borrowed funds used for investment, in a diversified portfolio of equity investments, including common stocks, preferred stocks, and other securities and instruments that exhibit equity-like characteristics.

GFVSX’s 3-year and 5-year annualized returns are 16.1% and 10.3%, respectively. Goldman Sachs Focused Value Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%, which is below the category average of 0.94%.

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

Neuberger Berman Large Cap Growth Fund NGUAX seeks long-term capital appreciation and, secondarily, current income through investments primarily in mid to large-capitalization companies with solid business fundamentals.

NGUAX’s 3-year and 5-year annualized returns are 13.8% and 14.2%, respectively. Neuberger Berman Large Cap Growth Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.83%, which is below the category average of 0.99%.

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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