With fears over interest rates and inflation diminished, investors in the third quarter were able to appreciate strong corporate earnings, and as a result, large-cap mutual funds delivered healthy results, MarketWatch reports.

“Large caps look as cheap as they have in decades,” commented John Linehan, portfolio manager of the T. Rowe Price Value Fund, which is mostly concentrated in large-cap stocks.

Index funds that follow the S&P 500 rose 5.5% in the third quarter, according to preliminary data from Lipper. Among actively managed funds, large-cap value funds rose 5.3% and large-cap core funds delivered 4.8%. Large-cap growth funds didn’t fare as well, however, posting gains of 2.5%.

By comparison, the average equity fund delivered 2%, weighed down by the small- and mid-cap sectors. Small-cap funds lost 0.7% in the quarter, while mid-cap funds posted a weak 0.6% gain.

Surprisingly, however, among sector funds, real estate funds delivered the strongest performance, rising 7.7% in the quarter.

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