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3 Strong Buy Large-Cap Value Mutual Funds

Investors interested in comparatively safer returns from stocks available at discounted prices may consider large-cap value mutual funds. While large-cap funds usually provide a safer option than small- or mid-cap funds, mutual funds investing in value stocks have the potential to deliver higher returns and exhibit lower volatility than their growth and blend counterparts. Large-cap funds generally invest in securities of companies with market capitalization of more than $10 billion. These funds have exposure to large-cap stocks that are expected to provide long-term performance history and assure more stability than what mid or small caps offer. Value funds, on the other hand, generally invest in stocks that tend to trade at a price lower than their fundamentals (i.e., earnings, book value and debt-to-equity) and pay out dividends. Value stocks are expected to outperform the growth ones across all asset classes when considered on a long-term investment horizon, and are less susceptible to trending markets. Below, we share with you three top-rated, large-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all large-cap value mutual funds, investors can click here . Vanguard U.S. Value Fund Inv (MUTF: VUVLX ) seeks long-term capital growth and high income. It invests all of its assets in undervalued companies having low price/earnings (P/E) ratios. VUVLX focuses on acquiring stocks of large and mid-cap companies having impressive growth potential and favorable valuations. The fund has a three-year annualized return of 9.3%. VUVLX has an expense ratio of 0.26%, compared with the category average of 1.1%. MFS Value Fund A (MUTF: MEIAX ) generally invests in equity securities, including common stocks, securities of REITs and convertible securities. Though it primarily invests in value companies having large capitalization, it may also invest in small and mid-cap companies. The fund has a three-year annualized return of 10.1%. As of March 2016, MEIAX held 100 issues, with 4.13% of its assets invested in JPMorgan Chase & Co. (NYSE: JPM ). Commerce Value Fund No Load (MUTF: CFVLX ) seeks capital appreciation. It invests a minimum of 65% of its assets in common stocks. Its investments include companies with an impressive earnings growth track record that are believed to pay out dividends. CFVLX may invest a notable portion of its assets in securities of companies from the financial sector. The fund has a three-year annualized return of 9.5%. CFVLX has an expense ratio of 0.70%, compared with the category average of 1.1%. Original Post

3 Things You Should Know About Factor Investing

Factors are broad, persistent drivers of returns that have been proven to add value to portfolios over decades, according to research data from Dartmouth College . Factor strategies like smart beta capitalize on today’s advancements in data and technology to give all investors access to time-tested investment ideas, once only accessible to large institutions. As factor strategies continue to gather attention, some misconceptions have arisen. I am highlighting – and clearing up – a few here today. 1. Factor strategies are stocks-only. False. Equity smart beta strategies like momentum, value, quality and minimum volatility are by far the most adopted factor strategies and often serve as the gateway to this type of investing. But it’s important to note that the concept extends beyond equities to other asset classes, such as bonds, commodities and currencies. As an example, fixed-income factors are less well known, but similarly aim to capitalize on market inefficiencies. Bond markets are largely driven by exposures to two macroeconomic risk factors: interest rate risk and credit risk. One way that bond factor strategies try to improve returns is by balancing those risks. As investors look for more precise and sophisticated ways to meet their investment goals, we believe we will see more factor strategies in other asset classes, as well as in long/short and multi-asset formats. 2. Factor investing is unnecessary, because my portfolio of stocks, bonds, commodities, hedge funds and real estate is well diversified. Maybe, maybe not. Oftentimes, a portfolio is not as diversified as you might think. You may hold many different types of securities, sure, but those securities can be affected by the same risks. For example, growth risk figures prominently in public and private equities, high yield debt, some hedge funds and real estate. So, as economic growth slows, a portfolio overly exposed to that particular factor will see its overall portfolio return lowering as a result, regardless of how diverse its holdings are across assets or regions. Factor analysis can help investors look through asset class labels and understand underlying risk drivers. That way, you can truly diversify in seeking to improve the consistency of returns over time. 3. Factor investing is a passive investment strategy. Not really. At least we don’t look at it that way. Factor investing combines characteristics of both passive and active investing, and allows investors to retain many benefits of passive strategies, while seeking improved returns or reduced risk. So to us, factor investing is both passive and active. While we think traditional passive, traditional active and factor strategies all have a place in a portfolio, it is not news that some of what active managers have delivered in the past can be found through lower-cost smart beta strategies. This post originally appeared on the BlackRock Blog.

Bespoke’s ETF Asset Class Performance Matrix – 5/6/16

Below is a look at our asset class performance matrix using key ETFs included in our daily ETF Trends (Subscription required) report. For each ETF, we include its performance in May, so far in Q2, and year to date. Equities are down across the board in May, with the worst pullbacks coming outside of the U.S. in countries like Brazil, Canada, Mexico, Spain, Russia and the U.K. In the U.S., major indices are down roughly 1% across the board, and sectors like Energy, Materials and Telecom are down 2%+. The Consumer Staples and Utilities sectors are the only ones higher so far this month. For Q2, the Nasdaq 100 (NASDAQ: QQQ ) and the Tech sector (NYSEARCA: XLK ) have been clear areas of pain, while the Energy sector is leading with a gain of 6%. Commodities are up nicely in Q2, with oil and silver leading the way. On a year-to-date basis, Brazil has posted a monstrous 33.85% gain. Gold and silver are the next best performers, with gains of 21.8% and 26.5%, respectively. The S&P 500 (NYSEARCA: SPY ) is as close to flat as it gets on the year with a gain of 26 basis points.