Americans appear to have lost some confidence lately. The Conference Board said on Feb 27 that the consumer confidence index unexpectedly fell to 106.7 in the month after three straight months of increases.

Economists had expected consumer confidence to reach 115 in February after a reading of 110.9 in January, a two-year high. However, the sudden decline in February came amid growing concerns over the economy’s health.

Consumers' expectations of inflation declined to 5.2%, hitting its lowest level since March 2020, after falling to 5.3% in January. However, inflation rose in January. The consumer price index (CPI) increased 3.1% year over year in January and 0.3% sequentially.

Core CPI, which excludes the volatile energy and food costs, rose 3.7% year over year in January.

The Federal Reserve earlier said that it is unlikely that the central bank would be ready for the first rate cut in March as inflation remains above its 2% target. Rising inflation has further dimmed hopes of a rate cut anytime soon.

Also, the minutes of the Federal Reserve’s last FOMC meeting suggest that officials would be ready for a rate cut only after they are confident that inflation has cooled further. Market participants are now expecting the first rate cut to get delayed till June.

Higher interest rates increase borrowing costs, which may keep markets volatile for a longer period.

Given the situation, a savvy investor might consider investing in large-cap value funds as a strategy to manage risks. Large-cap stocks, recognized for their historical stability, are generally perceived as more dependable compared to mid- or small-cap stocks.

Also, value funds, comprising stocks typically priced below fundamental metrics like earnings, book value and debt-to-equity ratios, while offering dividend payments, offer an appealing option for investors seeking lucrative 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).