Recently released economic data that shows a decline in March inflation and a jump in private payrolls has somewhat eased fears over the economy’s declining health. Also, President Donald Trump’s decision to temporarily pause tariffs and his reassurances that the White House is actively engaged in trade negotiations with various countries have triggered a Wall Street rally.
However, consumer sentiment is sharply down, and hit a five-year low in April as fears of a recession and the impact of tariffs continue to grow. There’s also uncertainty surrounding when the Federal Reserve might resume interest rate cuts, further clouding the economic outlook.
In such a turbulent economic climate, it would be safe for investors to opt for large-cap value funds to safeguard their investments. Three such funds are American Funds American Mutual A AMRMX, Northern Income Equity NOIEX and Putnam Large Cap Value A PEYAX.
Consumer Confidence at Its Lowest Point in Years
The Conference Board said that consumer confidence touched 86 in April, down 7.9 points from the previous month and the lowest since May 2020. This figure also fell short of economists’ expectations of a reading of 87.5.
The Expectations Index, which reflects consumer outlook for the next six months regarding business, income and employment, plummeted 12.5 points to 54.4—the lowest level since October 2011 and below the threshold of 80 that signals a recession. The Present Situation Index, a measure of current business and labor conditions, dipped to 133.5, driven by heightened recession fears and record-high concerns over tariffs.
Tariff-related anxieties have roiled markets since March, and even though Trump has announced a 90-day halt on them, uncertainty remains about their future impact. The Trump administration is reportedly in discussions with multiple nations, and the President has said that tariffs on Chinese goods will be lower once a deal is finalized. Currently, tariffs on Chinese imports stand at 145%.
Meanwhile, the U.S. economy contracted in Q1 2025 for the first time since early 2022. GDP declined 0.3%, sharply lower than the consensus estimate of a rise of 0.4%, following 2.4% growth in Q4 2024. Inflation eased in March, prompting Trump to press the Federal Reserve for interest rate cuts. However, the Fed remains cautious and has given no indication of easing monetary policy in the near future.
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).
American Funds American Mutual A fund seeks to provide balanced accomplishment of three objectives: current income, capital growth and conservation of principal. AMRMX invests primarily in common stocks, securities convertible into common stocks, non-convertible preferred stocks, U.S. government securities, bonds rated A or better and cash.
AMRMX’s 3-year and 5-year annualized returns are 7.1% and 14.5%, respectively. American Funds American Mutual Afund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.58%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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. In pursuing its objective, the Northern Income Equity fund invests at least 65% of its total assets in a mix of income-producing equity securities, with no limit on the fund's ability to invest in non-investment-grade fixed-income and convertible debt securities.
NOIEX’s 3-year and 5-year annualized returns are 9% and 18.2%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Putnam Large Cap Value A fund seeks current income. Capital growth is a secondary objective when consistent with seeking current income. PEYAX invests mainly in common stocks of U.S. companies, with a focus on value stocks that offer the potential for current income and for capital growth.
PEYAX’s 3-year and 5-year annualized returns are 10.7% and 19.6%, respectively. Putnam Large Cap Value A fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88%.
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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