Large Cap refers to publicly traded stocks with a market value between $10 and $200 billion, such as General Electric. They are generally considered safe, but investors should review financial statements and industry outlooks. Large-cap mutual funds and Dow Jones index funds are easy ways to invest.
Large Cap is an investment abbreviation for Large Capitalization. It is a reference to the market value or “market capitalization” of a publicly traded stock such as the Dow Jones Stock Exchange. A stock or company is said to have a large capitalization if its market value is between $10 and $200 billion. The limits are somewhat arbitrary though, and will vary depending on who you ask. General Electric (GE) is an excellent example of a large-cap company or stock.
Large-cap stocks are generally considered safe stocks. The size of these companies tends to make the share price fairly stable. It is unusual for them to experience significant growth or see large declines in the value of their share price. For this reason, many investors tend to park their money in large caps during times of uncertainty or turmoil in the stock markets.
However, not all large-cap companies can be considered safe. Even among the titles considered safe, there are better choices than others. A smart and diligent investor will still review the specific company’s financial statements and perhaps the industry outlook before investing in a particular stock.
It is also possible to invest in large-cap companies by using mutual funds that specialize in large-cap companies. There are many large-cap mutual funds to choose from. Most “blue chip” companies are also large-cap companies, so a mutual fund that invests in blue-chip companies is also a large-cap mutual fund.
An even easier way to invest in large-cap funds is to buy Dow Jones index funds. Only large companies tend to be listed on the Dow Jones stock exchange, also known as the senior exchange. An index fund invests equally in the companies that make up that index. So a Dow Jones 30 index fund will invest equally in the 30 companies that make up the Dow Jones 30 index. Large-cap index funds are also available that will invest in large-cap companies listed on other exchanges.
Smart Asset.
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