Learn about large-cap growth from companies offering mutual funds.
What is a large-cap growth fund?
- Large-cap growth funds invest in the stocks of larger companies. Large-cap stocks are stocks that are in the top 70% of capitalization of the equity market. The category is the biggest in terms of market share. A growth fund is a mutual fund that includes companies that are likely to have faster revenue or earnings growth than their industry peers or the overall market.
- Growthfunds are divided into small-, mid-, and large-cap categories.
- Mostgrowth funds are considered high risk and are best suited for individuals with a long-term investment horizon and healthy risk tolerance. Remember, however, that all investments involve risk, and risks include a loss of principal.
What does large-cap growth mean?
In the context of investment strategies, large-cap growth can signal a particular approach or focus for an investor or a mutual fund. It means that when choosing stocks to invest in, an investor is looking for big, well-known companies that have the potential to expand their businesses and increase their value at a faster rate than other companies. Essentially, it’s about picking stocks of larger companies that are expected to increase revenue and become more profitable.
Advantages of a large-cap growth portfolio
Large-cap companies are usually found in the market’s leading benchmark indexes, which include the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite.
- The S&P500 Index is the benchmark. It tracks the performance of the 500 largest publicly traded companies in the U.S. across several different sectors.
- TheDow Jones Industrial Average tracks the performance of “blue chip” companies. These companies are considered to be the dominant leaders in their respective industries.
- TheNasdaq Composite is a stock market index that includes over 3,000 stocks listed on the Nasdaq stock exchange. It includes some companies in the S&P 500 and some companies in the Dow Jones Industrial Average. The NASDAQ Composite is dominated by the informational tech sector.
Individual investors cannot invest directly in an index, but they can invest in mutual funds or ETFs (exchange-traded funds) that track an index.
Some of the benefits of investing in large-cap funds:
- Theunderlying large-cap companies are typically household names, with solid reputations for producing quality goods and services.1
- Investingin large-caps as a group can balance out the risks of any individual stock while positioning you to benefit from overall gains in the market.1
- Large-cap stocks are better suited to weather economic downturns than mid- or small-cap stocks.1
- It’srelatively easy for investors to find and analyze public information about a large-cap fund and its underlying invested companies.
- Themature market establishment of many large-cap companies has allowed them to institute and commit to high dividend payout ratios.
- Large-capstocks are generally less risky and are considered to be a more conservative investment choice when compared with small- or mid-cap stocks.
Investingin mutual funds that invest in large-cap companies
Large-capstocks have a unique advantage for investors, including stability in size, stable management teams, steady dividend payouts to shareholders, and clarity in valuations. Mutual funds are an easy way to tap into expert professional management so you can reach your long-term financial goals. Here are some things to consider when investing:
Longevity
Withindividuals living longer and fuller lives, investors may want to consider a diversified mix of long-term growth solutions across market capitalizations and regions. Diversification does not assure a profit or protect against market loss, but it can help mitigate losses.
Volatility management
Volatilitycomes in all shapes in sizes, and investors may want to consider solutions offered through our NYLIFE Securities LLC registered representatives to help manage volatility and build resilient portfolios.
Frequently asked questions
Investments are offered through NYLIFE Securities (memberFINRA/SIPC), a Licensed Insurance Agency and a New York Life company.
1Anna-Louise Jackson and John Schmidt, “Investing Basics: Large-Cap Stocks,” Forbes, October 27, 2021, Forbes.com.
FAQs
Large-cap growth funds invest in the stocks of larger companies. Large-cap stocks are stocks that are in the top 70% of capitalization of the equity market.
Are large-cap growth funds safe? ›
Buying large-cap stocks could be one of the safest equity investments offered by the stock market. Many if not most of these massive stocks provide decent dividends and growth potential, plus a lot less volatility than other corners of the market.
What is an example of a large-cap fund? ›
Large Cap funds are a kind of equity funds that invest a major proportion of their assets under management (AUM) in equity shares of companies with a large market capitalization, such as Reliance, HUL, TCS, and more. These companies that fall under this bracket are known to have a high reputation in the market.
What is the best large growth fund? ›
- Vanguard Growth ETF. VUG | ETF. ...
- iShares Morningstar Growth ETF. ILCG | ETF. ...
- iShares Core S&P US Growth ETF. IUSG | ETF. ...
- Fidelity Momentum Factor ETF. FDMO | ETF. ...
- JPMorgan US Momentum Factor ETF. JMOM | ETF. ...
- Direxion NASDAQ-100® Equal Wtd ETF. QQQE | ETF. ...
- Vanguard S&P 500 Growth ETF. VOOG | ETF. ...
- Invesco NASDAQ 100 ETF. QQQM | ETF. #10.
Key Takeaways
Large-value stocks refer to those companies that are both large-cap (greater than $10 billion in market capitalization) and also value stocks. Large-value stocks are often mature and stable companies that pay regular dividends, attractive to lower-risk value investors.
What are the disadvantages of large-cap funds? ›
Additionally, investments in large cap funds may help investors diversify their portfolios. However, these funds may be subject to certain drawbacks – they may have lower returns and high tax implications. These funds may be suitable for risk-averse investors seeking a long-term investment.
What is the disadvantage of growth funds? ›
Disadvantages of investing in growth funds
Higher volatility: Growth funds tend to exhibit higher volatility compared to debt funds, as they invest in equity of companies with higher growth potential, which may also be more susceptible to market fluctuations.
Who should invest in large-cap funds? ›
Long-Term Investor: large cap mutual funds are known to perform well over a long period of time. Given that there are minimal risks, and it is not completely risk-free, these funds are known to face short-term market fluctuations. Therefore, it is advised to stay invested in these funds for the long term.
What is the difference between large-cap and large-cap growth? ›
Large-cap stocks are stocks that are in the top 70% of capitalization of the equity market. The category is the biggest in terms of market share. A growth fund is a mutual fund that includes companies that are likely to have faster revenue or earnings growth than their industry peers or the overall market.
What is the difference between a growth fund and a mutual fund? ›
A growth fund is a mutual fund or exchange-traded fund (ETF) that includes companies primed for revenue or earnings growth at a pace that is faster than that of either industry peers or the market overall. Growth funds are separated by market capitalization into small-, mid-, and large-cap.
Ramsey often recommends allocating investments into four types of mutual funds: growth, growth and income, aggressive growth, and international funds. This diversification strategy helps protect against market volatility and ensures a balanced approach to retirement savings.
What is the most aggressive mutual fund? ›
Here are the best Aggressive Allocation funds
- Meeder Dynamic Allocation Fund.
- JPMorgan Investor Growth Fund.
- TIAA-CREF Lifestyle Aggressive Gr Fund.
- Franklin Mutual Shares Fund.
- North Square Multi Strategy Fd.
- Gabelli Focused Growth and Inc Fd.
- E-Valuator Agrsv Growth(85%-99%)RMS Fund.
The fund manager takes advantage of market shifts and maximizes profits by making purchasing and selling choices. Invest in Growth funds or Equity Funds? Investments in growth funds have a high degree of risk. Because of this, you should only pick growth funds if you are willing to take a high degree of risk.
Is it better to invest in mid-cap or large-cap? ›
Mid-cap stocks generally fall between large caps and small caps on the risk/return spectrum. Mid caps may offer more growth potential than large caps, and possibly less risk than small caps. Small-cap stocks tend to be, on average, least developed publicly traded companies, although there are exceptions.
How long to invest in large-cap funds? ›
However, the returns are lower compared to mid-cap or small-cap funds. In the long term (around five to seven years), these funds tend to offer good capital appreciation.
Is it better to invest in small-cap or large-cap? ›
Large-cap funds are less risky than small and mid-cap funds. Small and mid-cap funds have higher growth potential than large-cap funds. Large-cap funds are good for conservative investors. Mid and small-cap funds are suitable for medium-risk takers to aggressive investors.
Are large-cap funds high risk? ›
Large-cap funds, focused on established companies, offer lower risk and steadier returns, making them ideal for conservative investors. Conversely, mid-cap and small-cap funds, targeting growing companies, have the potential for higher returns but also carry greater risk.
How risky are growth funds? ›
Growth funds are separated by market capitalization into small-, mid-, and large-cap. Most growth funds are high-risk, high-reward, and are therefore best suited to market participants with a long-term investment horizon and a healthy risk tolerance.
How risky are large-cap stocks? ›
Large-caps are generally safer investments than their mid- and small-cap counterparts because the companies are more established, but their stocks may not offer the same potential for high returns.
Is it a good time to invest in large-cap mutual funds? ›
Long-Term Investor: large cap mutual funds are known to perform well over a long period of time. Given that there are minimal risks, and it is not completely risk-free, these funds are known to face short-term market fluctuations. Therefore, it is advised to stay invested in these funds for the long term.
