3 Large-Cap Value Funds to Protect Your Portfolio Amid High Inflation

Wholesale prices climbed more than expected in January, undercutting hopes that inflation was cooling. Stocks have been under strain in recent weeks amid a selloff in technology shares. By February, all three major indexes had given up most of their gains for the year.

At the same time, signs of a softening labor market have fueled worries about the broader economy and raised recession fears.

Given this situation, investors may consider investing in large-cap value funds, such as VALIC Company I Systematic Value Fund VBCVX, Northern Income Equity NOIEX and Bridge Builder Large Cap Value Fund BBVLX.

Inflation Soars Again

The Labor Department reported last week that the producer price index (PPI) rose 0.5% month over month in January, well above the economists’ expectations of an increase of 0.3%. On a year-over-year basis, PPI advanced 2.9%. Core PPI, which excludes volatile food and energy, jumped 0.8% sequentially in January, after increasing 0.6% in December, far exceeding forecasts of a 0.3% gain. Year over year, core PPI climbed 3.6%.

Both headline and core readings remain well above the Federal Reserve’s 2% target, underscoring that inflation pressures persist and continue to complicate the Fed’s future monetary policy path.

In January, the Fed held interest rates steady in its current range of 3.25%–3.5% after cutting the same three times in 2025 for a total of 75 basis points. While markets had been hopeful about multiple rate cuts this year, the latest inflation data may temper that optimism.

Meanwhile, a weakening labor market is weighing on consumer confidence, and a recent tech rout driven by concerns over AI-related disruption has added to market unease. Together, these factors suggest that market volatility could linger for some time.

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).

VALIC Company I Systematic Value Fund primarily invests in equity securities of U.S. large- and mid-cap companies, selected on their inclusion on the Russell 1000 Value Index, which identifies companies with value characteristics such as lower price-to-book ratios and lower expected growth values.

VBCVX’s 3-year and 5-year annualized returns are 14.6% and 14.2%, respectively. VALIC Company I Systematic Value Fundhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.60.

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.

NOIEX’s 3-year and 5-year annualized returns are 19.7% and 15.1%, respectively. Northern Income Equity fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.49%, which is lower than its category average.

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

Bridge Builder Large Cap Value Fund aims for capital appreciation. BBVLX invests the majority of its assets in securities of large-capitalization companies and other instruments, such as certain investment companies, with economic characteristics that seek to track the performance of securities of large-capitalization companies.

Bridge Builder Large Cap Value Fund has 3-year and 5-year annualized returns of 13% and 12.8%, respectively. BBVLX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.22%, which is lower than its category average.

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

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