Large Cap Equity Mutual Funds
The Index we benchmark against for large cap funds is the S&P 500
Large cap mutual funds will invest in those equities that command a huge amount of market capitalization. In order for an investment fund to fall under this category, the average market capitalization of the securities it holds within its portfolio must meet a single condition.
We look at the “average” market cap because even a large cap fund may hold mid or even small cap equities for a variety of reasons (e.g. a market correction resulted in a stock’s capitalization falling below the $10 billion threshhold), but as long as the fund’s average capitalization leans more toward large cap than mid or even small cap, then we will classify that mutual fund as a large cap fund.
As with everything we do at this site, the classification of the fund will get drilled down to the underlying assets. And in order to be considered a large cap stock, an equity must have more than $10 billion in market capitalization. Consider the following example:
An equity mutual fund holds 100 securities. In order for this fund to be classified as a large cap fund, its total market capitalization would need to exceed $1 Trillion ($10 Billion X 100 stocks). That means that some equities may have a market cap of $30 billion while others have less than $2 billion, yet so long as this investment fund’s average market cap exceeds $10 Billion per security, we will classify it as a large cap fund.
Unfortunately, very few investments are labeled simply as “large cap funds.” In fact, our page about Growth Funds lists a basis chart that specifies two different types of large cap funds — value and growth, which is more in line with industry classifications than simply labeling a fund as large cap. Therefore, a second classification is often needed to properly assign a mutual fund to a particular category — value or growth.
Other Market Capitalization Classifications To Consider