Large-Cap Core Mutual Funds

Aug 30, 2022 By Triston Martin

Investments in large-cap securities, or stocks of firms having a market capitalization of more than $10 billion, tend to be less volatile in price and more likely to provide consistent dividends, both of which boost a portfolio's total return. Investors seeking diversified exposure to the large-cap equities market often turn to "core" mutual funds, which invest primarily in a group of stocks that form the market's "core" holdings.

Core mutual funds that invest in large-cap companies provide investors exposure to the whole spectrum of the large-cap market, including firms with a bias toward either growth or value. While there are benefits to investing in a large-cap core mutual fund, investors should be mindful of the risks associated with equity investments, including the loss of principle and increased volatility.


The goal of the fund management is to provide a total return for investors that is greater than the total return of the S&''P 500 Index before fees and costs are deducted. Over time, they hope to beat the Index by deliberately adjusting the fund's total number and proportion of holdings.

Most of a fund's assets will be in U.S. stocks, and those stocks will be concentrated in the gigantic cap categories. The fund is well-balanced, with 27.1% invested in tech stocks, 13.7 % in healthcare stocks, 12.4 % in financial services stocks, and 11.1 % in consumer discretionary stocks.


With its inception in April 2007, the Fidelity Large-Cap Core Enhanced Index Fund (FLCEX) has amassed over $1.6 billion in assets. The fund's objective is long-term capital growth, which is pursued by investing most of its net assets in common companies included in the S&''P 500 Index. The fund has achieved an annualized return of almost 14% over the last decade as of 2021.

Although most of the fund's assets are invested in U.S. companies, fund managers can allocate capital among domestic and overseas issuers as they see suitable. The fund invests mostly in gigantic stocks, with just a minor portion in mid and small-cap companies. Equities in the technology sector accounted for 28% of the portfolio, followed by stocks in the healthcare sector (13.9%), the financial sector (13.3%), and the consumer discretionary sector (13%). The fund's net cost ratio is 0.39 percent, which is cheap compared to similar options.


Established in July 1996, the Schwab Core Equity Fund now has under management $1.5 billion in assets. The fund's primary holdings are domestic stocks to provide investors with long-term capital growth. Most of the mutual fund's holdings are in securities issued by U.S. companies with over $500 million in market caps. A common goal amongst fund managers is to outperform the S&''P 500 Index. The fund earned an average return of 12.3% over its first decade of operation as of December 2021.

Fund managers provide some diversity via sector exposure, although the whole portfolio consists of local shares. The largest sector by far is technology securities at 29.2%, followed by healthcare equities at 15.1%, consumer discretionary stocks at 13.3%, and financial services stocks at 10.0%. Apple, Microsoft,, Accenture, and Alphabet are just some of the top holdings in the Schwab Core Equity Fund. There is a net expense ratio of 0.73% for the fund.


Since its inception in December 1999, the BlackRock Advantage Large-Cap Core Fund (MALRX) has amassed $3.2 billion in assets. Most of the fund's net assets are invested in equity securities of significant corporations as part of the managers' efforts to generate long-term capital growth for investors. Most of the portfolio comprises common shares issued by companies included in the Russell 1000 Index, which are all based in the United States. The fund's annualized return from 2001 to 2021 was 13.1%.

Information technology companies account for 26.4% of the portfolio's total value, making it the largest single-sector allocation. The largest sector represented in the portfolio is financial services stocks (15%), followed by healthcare stocks (13.6%) and consumer discretionary stocks (10%). The fund's top holdings consist mostly of Microsoft, Apple,, J&''J, and Alphabet. This basic mutual fund has a net cost ratio of 0.48%.

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