The uncertainty over the timing of the next interest rate cut is making investors jittery. The Federal Reserve has suggested that it is in no rush to cut rates, as it has adopted a cautious approach.
Policymakers are particularly concerned about rising inflation, which could be intensified by tariffs imposed by President Donald Trump. According to the minutes from the Fed’s latest meeting, released last week, most officials are not inclined toward an immediate rate cut. This could keep markets volatile for a longer period.
In such an unpredictable environment, investors may want to consider investing in large-cap value funds for safety. Three such funds are: Shelton Equity Income Investor EQTIX, Putnam Large Cap Value A PEYAX and Northern Income Equity NOIEX.
The minutes of the Federal Reserve’s latest meeting suggest that only a few officials believe that a rate cut might be appropriate as early as this month. Most officials are adopting a wait-and-watch stance, wary of potential inflation stemming from tariffs that are set to begin on Aug. 1.
While the minutes acknowledge the inflation risk as “considerable uncertainty,” most participants expect any impact to be minor or short-lived and don’t see an urgent need for action.
Meanwhile, Trump has been pressuring the Federal Reserve for immediate rate cuts and has even called for Chairman Jerome Powell’s resignation, claiming that the delay in rate cuts is costing the U.S. economy hundreds of billions of dollars.
Though some investors remain hopeful for a 25-basis-point cut in July due to signs of slowing inflation and a weakening job market, it appears unlikely the Fed will move forward with a cut at the upcoming FOMC meeting, raising the possibility of renewed market volatility.
Also, stocks retreated on Friday after Trump announced a 35% tariff on Canada, one of the biggest trading partners of the United States, and threatened higher duties across the board. This reignited fears of a trade war after indexes hit new all-time highs earlier in the week.
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).
