3 Low-Risk Mutual Funds to Buy for Volatile Times

  • Fidelity Value Fund (FDVLX): This fund offers exposure to undervalued stocks in terms of assets, earnings, and growth potential.
  • T. Rowe Price Dividend Growth Fund (PRDGX): Robust stocks in the fund could help reduce portfolio volatility.
  • Vanguard Equity-Income Fund Investor Shares (VEIPX): The fund focuses on businesses that can sustain and increase their dividend payouts.
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Seasoned investors regularly research strong mutual funds to buy. In terms of total assets, mutual funds remain the most popular investment tool stateside, especially in retirement saving accounts, such as 401(k) plans.

Total net assets in mutual funds were about $23.9 trillion in 2020. Equity funds typically account for well over half of that value. Moreover, recent research forecasts that total assets in mutual funds could reach $26.8 trillion in 2025.

Mutual funds are inherently diversified, investing in a portfolio of stocks and bonds, as well as hybrid assets. Meanwhile, mutual funds are used by a broad spectrum of investors. They include long-term investors, active-management seekers, or systematic investors saving for later years.

In fact, mutual funds are widely regarded as the keystone of buy-and-hold and retirement investment strategies. We should note that it is wiser to think in terms of years or even decades when investing in mutual funds.

With that information, here are three mutual funds to buy that could gain traction in the coming months:

FDVLX Fidelity Value Fund $14.78
PRDGX T Rowe Price Dividend Growth Fund $70.32
VEIPX Vanguard Equity-Income Fund Investor Shares $44.25

Mutual Funds to Buy: Fidelity Value Fund (FDVLX)

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  • 52-week range: $13.73 – $16.29
  • Dividend Yield: .75%
  • Expense ratio: 0.79% per year

Our first mutual fund is the Fidelity Value Fund (NASDAQ:FDVLX). It offers exposure to stocks considered undervalued in terms of assets, earnings, or growth potential. This mutual fund skews toward smaller-capitalization (cap) stocks instead of chasing more high-profile names that are typically efficiently priced.

FDVLX, which started trading in December 1978, currently has 246 holdings. With regards to sectors, we see industrials at 20.86%, followed by consumer discretionary at 12.95%, financials at 12.30%, and materials at 10.57%, among others.

Meanwhile, the top 10 holdings account for almost 10% of net assets of around $9.6 billion. Among the leading holdings on the roster are the data analytics company Nielsen Holdings (NYSE:NLSN); building products supplier Builders FirstSource (NYSE:BLDR); discount variety stores operator Dollar Tree (NASDAQ:DLTR); natural gas exploration and production company Hess Corporation (NYSE:HES); and energy services provider Edison International (NYSE:EIX).

FDVLX is up 4% over the past 12 months and almost 1% since the start of the year. I like the diversity of the focus. Readers who want to buy smaller businesses that offer value could consider a mutual fund like FDVLX.

T. Rowe Price Dividend Growth Fund (PRDGX)

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  • 52-week range: $62.84 – $74.24
  • Dividend yield: 0.89%
  • Expense ratio: 0.63% per year

Next up on our list of mutual funds to buy is the T. Rowe Price Dividend Growth Fund (NASDAQ:PRDGX). It invests in high-quality, large companies with strong track records of paying dividends. Many of these businesses also increase their dividends over time. The fund started trading in December 1992.

PRDGX has 98 holdings, where the leading 10 comprise more than a quarter of $20.9 billion in net assets. Information technology shares have the highest slice with 21%. Next is health care with 16.79%, financials at 14.27%, industrials and business services at 12.74%, and consumer staples at 7.4%.

Microsoft (NASDAQ:MSFT); Apple (NASDAQ:AAPL); diversified healthcare insurer UnitedHealth (NYSE:UNH); Danaher (NYSE:DHR), which provides medical and industrial products and services; and payments giant Visa (NYSE:V) are among the leading shares in the portfolio.

These names typically have durable earnings and stable cash flow. As a result, a mutual fund like PRDGX could help decrease the overall volatility of a long-term portfolio. It is up 11.9% over the past 12 months.

Mutual Funds to Buy: Vanguard Equity-Income Fund Investor Shares (VEIPX)

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  • 52-week range: $41.39 – $46.21
  • Dividend yield: 2.22%
  • Expense ratio: 0.28% per year

Our final fund, the Vanguard Equity-Income Fund Investor Shares (NASDAQ:VEIPX), could appeal to long-term investors seeking current income. This mutual fund invests in high-yield dividend stocks with solid balance sheets and stable earnings growth. It also focuses on businesses that can sustain and increase their payouts.

VEIPX, which started trading in March 1988, has 188 holdings. In terms of sectors, financials have the top spot at 21%, followed by health care with 16%, consumer staples with 14.20%, and industrials with 10%, among others.

The top 10 stocks in the portfolio account for almost a quarter of $52.5 billion in net assets. Healthcare giants Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE), financial heavyweights JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC), and consumer goods provider Procter & Gamble (NYSE:PG) are among the leading names on the roster.

The fund is up 12% over the past 12 months. Buy-and-hold readers could consider investing in a fund like VEIPX for the long-run.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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