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The best large cap funds

Updated on July 31, 2015

Picking the best large cap funds is smart planning

While the definition of a large cap stock varies the simple expiation of a large cap stock is a companies stock being listed in the Standard and Poors 500 index. Some describe a large cap stock as on having a market capitalization in excess of 8 billion dollars.

Large cap mutual funds invest in the stocks of companies that are of the described size.

Large cap mutual funds tend to follow a slightly different cycle than small and mid cap fund. Owning both types of funds in a portfolio is more desirable resulting in increased diversification.

So what are the best large cap mutual funds? There are two schools of thought. Some people believe that low cost index funds are the way to go others believe a managed fund can outperform the index. There are some very good no load low cost index funds two examples are:

Fidelity Spartan 500 Index fund symbol FUSVX. This fund has an expense ratio of .07 percent making it a very good choice for investors.

Vanguard 500 index fund symbol VFINX. This fund has a slightly higher expense ratio of 0.18 percent which is very small.

A nice feature of an index fund is an investor does not have to worry about the size of the fund. A large cap index fund is going to outperform 80 percent of the managed funds in the large cap category.

Another method for investing in the large cap market are exchange traded funds. The most commonly traded is the SPY which is a proxy for the Standard and Poors 500 index which has an expense ratio of 0.09 percent. The NASDAQ 100 is traded under the symbol QQQQ and has an expense ratio of 0.2 percent. Although the cost of the exchange traded funds are very low an investor must normally pay a commission to buy and sell these funds.

Most great large cap funds are focused funds.

What about managed funds?

There are some recommendations here too. Unlike small and mid cap funds where a good manager can really dig down deep and find excellent companies, a large cap manager has a much more limited universe to work with.

The Oakmark Fund symbol OAKMX: This fund was up 5.7 percent over the last decade ending 2009. This fund is a relatively concentrated fund with 56 stocks as of its latest report. This fund has kicked out a 12.5 percent gain on an annual basis since its inception in 1991. This is still a great fund. It did not make my list of recommended funds for 2012 as it has become quite large.

The FMI Large Cap Fund symbol FMIMX: This fund is up 10.58 percent over the last 10 years and up 12.1 percent per year since the funds inception in 1981. This fund is also a concentrated portfolio fund with only 46 stocks as of its last report. This fund did not make my list of recommended funds for 2013 since it's performance has slipped and it has moved into the mid cap fund classification. At this point I am close to selling this fund.

Yacktman Fund symbol YACKX. This is another five star fund run by Donald Yacktman. This fund has nearly doubled in the past year. Over the last ten years it is up 13.6 percent per year. Since 1992 this fund is up almost 10 percent per year. Both the Yacktman Fund and the Yacktman Focused Fund are fine choices.

While having the best large cap funds will go a long way towards meeting your financial goals as investor more diversification is highly recommended. Develop your own asset allocation and invest in the best funds in those asset classes. Once the investor has their asset allocation select the best small cap, best mid cap, global, bond, and even concentrated portfolio funds for your portfolio.

Regardless if you are investing in your IRA, 401K, 403B or taxable account invest your money wisely. How you invest is equally as important as how much you invest.


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