Exchange-traded funds (ETFs) give investors easy access to a large number of high-quality investments. The fund manager is responsible for selecting stocks that align with the ETF’s stated objectives.
Large ETFs hold stocks with a market capitalization of $10 billion or more. However, most of the stocks in these types of funds tend to have market capitalizations well above $10 billion. For example, Microsoft Corp. (ticker: MSFT) is a staple in many of these funds, with a market capitalization of over $3 trillion.
Large-cap ETFs have several advantages over mid-cap and small-cap ETFs. Louis Wolkenstein, Managing Principal at Investment Advisors, highlighted some of the benefits that large-cap ETFs offer, saying, “The advantages of large-cap stocks over mid-cap and small-cap stocks are generally stability, returns, large-cap stocks are more likely to pay dividends than mid-cap and small-cap stocks.
Large-cap ETFs allow investors to gain exposure to industry giants without having to monitor their holdings. Instead of digging deep into individual stock analysis, you can monitor and compare ETFs.
ETFs make investing easier, but you need to compare them to determine which fund offers the best opportunity. It’s also important to evaluate whether the fund is aligned with your long-term financial goals.
Julia Kandoshko, CEO of international brokerage firm Mind Money, shares some important details to consider when comparing large-cap ETFs: “Evaluating ETFs However, the truth is that anyone can easily buy the largest one because it is the most liquid and therefore the most reliable. It means you have a choice.”
Choosing a fund with larger assets under management will result in lower expense ratios and higher liquidity. While the size of a fund is important, so too is its holdings. These large-cap ETFs prioritize stocks with high market capitalization that have produced good returns for patient investors.
| Large-cap ETF | expense ratio |
| Vanguard Growth ETF (ticker: VUG) | 0.04% |
| Invesco QQQ Trust (QQQ) | 0.20% |
| Schwab U.S. Large Cap ETF (SCHX) | 0.03% |
| Invesco S&P 500 Top 50 ETF (XLG) | 0.20% |
| Vanguard Mega Cap Growth ETF (MGK) | 0.07% |
| Schwab U.S. Large Cap Growth ETF (SCHG) | 0.04% |
| iShares Russell 1000 Growth ETF (IWF) | 0.19% |
Vanguard Growth ETF (VUG)
The Vanguard Growth ETF has total assets of $121.4 billion and an expense ratio of 0.04%. This highly affordable fund has been a top performer for many years. The annualized return over the past 15 years was 16.3%, and the annualized return over the past 5 years was 16.7%.
VUG holds 202 shares, with the majority of its capital allocated to Magnificent Seven shares. The fund holds 13% of its assets in Microsoft stock. Apple Inc. (AAPL), Nvidia Corp. (NVDA), and Amazon.com Inc. (AMZN) together represent 26.3% of the fund’s total assets.
The fund manager has been working at VUG for some time. Gerald C. O’Reilly, a longtime Vanguard fund veteran, has been managing the Vanguard Growth ETF since 1994. Walter Negiman has co-managed the fund with O’Reilly since 2016.
Most of the fund’s holdings are in US companies. Only 0.2% of the fund’s total assets are invested in non-U.S. stocks, and 0.2% is currently held in cash.
Invesco QQQ Trust is considered one of the most liquid ETFs available. It has total assets of $258 billion and focuses on large-cap U.S. stocks.
Since its inception in 1999, QQQ has significantly outperformed the S&P 500. His ETF has returned an impressive 19.4% annually over the past 15 years. The annualized return over the past five years has been stable at 19.1%. The fund’s expense ratio is 0.2%.
QQQ tracks the Nasdaq 100 and favors Magnificent Seven stocks. Each member of the cohort, including Microsoft, Apple, Nvidia, Amazon, Meta Platforms Inc. (META), Alphabet Inc. (GOOG, GOOGL), and Tesla Inc. (TSLA), forms part of the fund’s top 10 assets. I am.
Broadcom Inc. (AVGO) accounts for 4.4% of the fund’s total assets and occupies the No. 6 spot. Just below that are Alphabet’s Class A and C shares, as well as Tesla stock. Microsoft accounts for 8.6% of the fund’s total assets, making it the most weighted asset in the fund’s performance.
Schwab U.S. Large Cap ETF (SCHX)
The Schwab U.S. Large Cap ETF has a low expense ratio of 0.03% and prioritizes U.S. large cap stocks. Its annualized return of 12.6% over the past 10 years shows its solid track record. It has generated an annualized return of 13.7% over the past five years.
Investors have access to 750 of the largest U.S. companies, ranked by market capitalization. The fund’s beta value is 1.02, indicating that its volatility is roughly in line with the stock market. In addition, the price-to-earnings ratio is 20.8 times, and the Magnificent Seven stocks are concentrated. Microsoft is the fund’s largest position, accounting for 6.6% of total assets.
The four-man manager team also includes Ferian Juwono, who has led the fund since 2010. SCHX has total net assets of $39.9 billion and a trailing 12-month yield of 1.3%.
Invesco S&P 500 Top 50 ETF (XLG)
The Invesco S&P 500 Top 50 ETF prioritizes the top 50 stocks in the S&P 500 based on market capitalization. While the S&P 500 has produced stable returns over the long term, funds like XLG demonstrate that higher returns can be achieved by focusing on the best.
XLG has an expense ratio of 0.2% and total assets of $4.1 billion. The fund has returned 14.8% annually over the past 15 years and 16.3% annually over the past five years. Three of the four fund managers were appointed in April 2018.
The fund invests exclusively in U.S. stocks and prioritizes the Magnificent Seven. Microsoft holds 12.2% of the fund’s total assets, making it the largest holding.
Vanguard Mega Cap Growth ETF (MGK)
Vanguard Mega Cap Growth Index Fund ETF has an annualized return of 16.8% over the past 15 years, and a whopping 17.4% annualized return over the past 5 years. Unsurprisingly, the portfolio is supported by Magnificent Seven stocks.
Microsoft once again takes the lead, accounting for 14.9% of the fund’s total assets. His next two largest companies are Apple and Nvidia, accounting for 11.9% and 10.1% of his holdings, respectively. MGK returns most of his profits to shareholders since his expense ratio is only 0.07%.
The top-heavy fund is managed by O’Reilly and Michelle Louis. Mr. O’Reilly has overseen MGK since 2015, and Mr. Louis joined the management team in 2021.
Schwab U.S. Large Cap Growth ETF (SCHG)
The Schwab U.S. Large Cap Growth ETF, rated 5-star by Morningstar, has total assets of $27.3 billion and an expense ratio of just 0.04%. The fund has provided exceptional returns to long-term investors, with returns of an impressive 16% per annum over the past 10 years and 18% per annum over the past five years.
Microsoft, Apple, and Nvidia are the fund’s top three companies, together accounting for 32% of the fund’s holdings. The fund’s portfolio managers make up the same team that manages SCHX: Juwono, Christopher Bliss, Jeremy Brown, and Agnes Zau. Managers began collaborating with SCHG at the same time they began working with SCHX.
iShares Russell 1000 Growth ETF (IWF)
The iShares Russell 1000 Growth ETF, which also has a 5-star rating from Morningstar, has total assets of $89 billion and an expense ratio of 0.19%. The fund focuses on large- and mid-cap stocks, but most of its money is allocated to stocks with large market capitalizations.
Each member of the Magnificent Seven is among the ETF’s top 10 holdings. These seven stocks, including Alphabet’s Class A and Class C shares, represent a total of 49.6% of the fund’s total assets. Eli Lilly & Co. (LLY) and Broadcom round out the top 10.
IWF has returned 16.6% annually over the past 15 years. It has also maintained an annualized return of 17.2% over the past five years. The fund has been around since 2000, with Greg Savage leading his three-person management team and a strong track record dating back to 2008.
