Large-cap stocks comprise over 80% of the total stock market. Below we'll review the 9 best large cap ETFs.
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Introduction – Why Large Cap Stocks?
Large-cap stocks in aggregate are less volatile and thus more “stable” than mid- and small-caps. Large-cap stocks as a whole make up over 80% of the total stock market by weight. They are also more popular and thus more liquid than their mid- and small-cap counterparts, as many investors prefer to simply buy an index of large-caps like the S&P 500 or the Russell 1000. Consequently, there are more ETFs available for large-caps than for any other cap size.
Household names like Amazon, Google, Johnson & Johnson, etc. are all large-cap stocks. The largest of the large-caps, called mega-caps, are colloquially known as “blue chips,” considered dependable long-term investments. Retirees and investors with a lower risk tolerance will likely prefer large-cap stocks to mid- and small-caps, as they have a lower risk profile. Warren Buffett himself has instructed that his wife's inheritance be invested mostly in an S&P 500 index fund, all large-caps.
Let's explore the best large cap ETFs.
The 9 Best Large Cap ETFs
Below are the 9 best large cap ETFs to capture the bulk of the market.
SPY – SPDR S&P 500 ETF
The SPDR S&P 500 ETF (SPY) is the most popular large-cap ETF, and is actually the most popular ETF overall, with over $300 billion in assets. It is also one of the oldest large cap ETFs, founded in 1993. This ETF seeks to track the famous S&P 500 Index, comprised of the 500 largest companies in the United States. It is considered to be a barometer for “the market” in the U.S. The fund has an expense ratio of 0.09%.
MGC – Vanguard Mega Cap ETF
The Vanguard Mega Cap ETF (MGC) holds about 250 of the largest companies in the United States. The fund seeks to track the CRSP US Mega Cap Index. These famous stocks – Procter & Gambler, Disney, Visa, Apple, Amazon, etc. – are considered “blue chips” – dependable, stable, safe companies that are likely to easily survive black swan stock crashes. This fund has an expense ratio of 0.07%.
OEF – iShares S&P 100 ETF
The S&P 100 Index is an even more concentrated index of mega-caps, tracking the 100 largest companies in the United States. Investors can access this index with the iShares S&P 100 ETF (OEF). The fund has an expense ratio of 0.20%.
VONE – Vanguard Russell 1000 ETF
Investors seeking broader, more diversified large-cap exposure may desire to invest in the Russell 1000 Index via the Vanguard Russell 1000 ETF (VONE). This index tracks the 1,000 largest companies in the United States, which make up over 90% of the total U.S. stock market. The fund has an expense ratio of 0.08%.
IOO – iShares Global 100 ETF
Prefer to go global with mega-caps? The iShares Global 100 ETF seeks to track the S&P Global 100 Index, an index 100 of the largest stocks around the world. Note that the United States still comprises about 70% of the fund's exposure, with the other 30% going to international developed markets. This ETF has an expense ratio of 0.40%.
VEU – Vanguard FTSE All-World ex-US ETF
For international (ex-US) diversification, the Vanguard FTSE All-World ex-US ETF (VEU) provides exposure to both foreign developed markets and emerging markets. The fund seeks to track the FTSE All-World ex US Index. It has nearly 3,500 holdings, $40 billion in assets, and an expense ratio of 0.08%.
VWO – Vanguard FTSE Emerging Markets ETF
Prefer to target large-caps in emerging markets? The Vanguard FTSE Emerging Markets ETF (VWO) has over $85 billion in assets under management and over 5,000 holdings. The fund seeks to track the FTSE Emerging Markets All Cap China A Inclusion Index and has an expense ratio of 0.10%.
VEA – Vanguard FTSE Developed Markets ETF
Those seeking to specifically target international large-caps in developed markets can do so with the Vanguard FTSE Developed Markets ETF (VEA). The fund has over $115 billion in assets, nearly 4,000 holdings, and an expense ratio of 0.05%.
IEFA – iShares Core MSCI EAFE ETF
Investors wanting to invest in large-caps in the EAFE can use the iShares Core MSCI EAFE ETF (IEFA). The fund seeks to track the MSCI EAFE IMI Index and excludes the United States and Canada. It has over $70 billion in assets, nearly 2,500 holdings, and an expense ratio of 0.07%.
Where to Buy These Large Cap ETFs
All these large cap ETFs are available at M1 Finance. M1 has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, and a sleek, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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