What are Large Cap Mutual Funds?

Large Cap mutual funds primarily invest in companies with the highest market capitalizations.

Large capitalization mutual funds, also called “large cap funds,” invest primarily in large companies with market capitalization of over $10 billion. Some examples include Microsoft, General Electric, Google, and other well-known companies.

Some large cap mutual funds invest in all of the companies in an index (therefore closely following the performance of that index), and some pick and choose which large companies to select in an attempt to outperform the index. For more information about indices, see “What is Index Investing?

The most commonly accepted index for large cap, blue-chip, American companies is the S&P 500, but other indexes can be used, such as the Fortune 500, which may be even better representations of the low-volatility and steady growth expected from the large cap category.

Companies with market capitalization of over $200 billion are sometimes referred to as mega cap. Most large cap mutual funds perform well in a strong economy and are less volatile than smaller cap funds during turbulent times.

What are Small Cap Mutual Funds?
What are Core Mutual Funds?
What is Mutual Fund Classification According to the Price to Earnings Ratio?