3 Large-Cap Value Funds to Safeguard Your Investments During Elevated Inflation

Market Volatility and Inflation Concerns

In January, wholesale prices surged more than analysts had anticipated, casting doubt on the notion that inflation was easing. This development, combined with a recent downturn in technology stocks, has put significant pressure on the markets. By February, the major stock indexes had lost nearly all of their earlier gains for the year.

Simultaneously, emerging signs of a cooling job market have heightened concerns about the overall economic outlook and increased speculation about a possible recession.

Given these challenges, investors might want to focus on large-cap value funds such as VALIC Company I Systematic Value Fund, Northern Income Equity, and Bridge Builder Large Cap Value Fund.

Inflation Remains Elevated

According to the latest report from the Labor Department, the producer price index (PPI) increased by 0.5% in January compared to the previous month, surpassing the expected 0.3% rise. On an annual basis, PPI was up 2.9%. The core PPI, which excludes the more volatile food and energy sectors, jumped 0.8% in January after a 0.6% increase in December, both well above the forecasted 0.3%. Year-over-year, core PPI climbed 3.6%.

These figures, both for headline and core inflation, remain significantly above the Federal Reserve’s 2% target, highlighting persistent inflationary pressures and complicating the central bank’s policy decisions.

In January, the Federal Reserve opted to keep interest rates unchanged at 3.25%–3.5%, following three rate cuts in 2025 totaling 75 basis points. While investors had hoped for more rate reductions this year, the latest inflation data may dampen those expectations.

Additionally, a softer labor market is eroding consumer confidence, and recent volatility in tech stocks—partly due to concerns about AI-driven disruption—has added to market uncertainty. These factors suggest that market instability may persist in the near term.

Top 3 Large-Cap Value Funds to Consider

We have highlighted three large-cap value mutual funds that have delivered strong annualized returns over the past three and five years. Each of these funds holds a Zacks Mutual Fund Rank of #1 (Strong Buy), requires an initial investment of $5,000 or less, and features a low expense ratio.

Why choose mutual funds? They offer lower transaction costs and allow investors to diversify their portfolios without incurring multiple commission fees typically associated with buying individual stocks.

• VALIC Company I Systematic Value Fund: This fund primarily invests in U.S. large- and mid-cap equities that are part of the Russell 1000 Value Index, focusing on companies with value characteristics such as lower price-to-book ratios and modest growth expectations. Over the past three and five years, VBCVX has posted annualized returns of 14.6% and 14.2%, respectively. It carries a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.60%.
• Northern Income Equity: This fund aims to deliver high current income, with long-term capital appreciation as a secondary goal. It targets companies that provide strong current yields and have the potential for growth. NOIEX has achieved annualized returns of 19.7% over three years and 15.1% over five years. It holds a Zacks Mutual Fund Rank #1 and has a competitive annual expense ratio of 0.49%, which is below the category average.
• Bridge Builder Large Cap Value Fund: Focused on capital appreciation, this fund invests mainly in large-cap companies and related instruments that aim to mirror the performance of large-cap equities. BBVLX has delivered annualized returns of 13% over three years and 12.8% over five years. It is rated Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.22%, also below the category average.

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