Large-cap securities, or those invested in companies with a market capitalization of more than $10 billion, provide stability in price, and often, steady dividend payouts that enhance the overall return on a portfolio. In the large-cap equities market, core mutual funds, which allow investors to gain exposure to specific market segments through a single investment position, are a popular choice. Core mutual funds with a focus on large-cap positions provide investors access to all aspects of the large-cap market, including growth- and value-tilted stocks. While investing in a large-cap core mutual fund provides some advantages, investors should be aware of the potential loss of principal and volatility inherent to equity holdings.
Among the top large-cap mutual funds to consider are the Columbia Large-Cap Enhanced Core Fund (NMIAX), the Fidelity Large-Cap Core Enhanced Index Fund (FLCEX), the Schwab Core Equity Fund (SWANX) and the BlackRock Advantage Large-Cap Core Fund (MALRX). The information presented here was current as of Sept. 30, 2020.
Columbia Large-Cap Enhanced Core Fund
The Columbia Large-Cap Enhanced Core Fund was established in July 1996 and has $444 million net assets. Fund managers seek to provide investors with a total return, before fees and expenses, that exceeds the total return of the Standard and Poor's 500 Index (S&P 500). They strategically shift the number and percentage of holdings within the fund in an effort to outperform the Index and reduce the potential of underperforming over time. As of September 2020, the fund has generated a 10-year annualized return of 13.17%.
Fund managers focus on investment holdings in the U.S. market, with the majority of securities falling in the giant- and large-cap ranges. Diversification across various sectors is present, with 27.8% of the portfolio invested in technology securities, 14.6% in health care securities, 9.2% in financial services securities and 12.1% in consumer discretionary securities. Top holdings of the Columbia Large-Cap Enhanced Core Fund include: Microsoft (MSFT), Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Alphabet Inc. CI A (GOOGL).
Fidelity Large-Cap Core Enhanced Index Fund
The Fidelity Large-Cap Core Enhanced Index Fund started in April 2007 and has more than $1,045.02 million in net assets. Fund managers seek to provide long-term capital appreciation by investing substantially all of the net assets in common stocks found within the S&P 500 Index. Although similar market capitalization weightings can be found within the Fidelity Large-Cap Core Enhanced Index Fund, managers utilize computer-aided quantitative analysis of common stock to understand a company's historical valuation, growth, profitability and other factors that present the opportunity to outperform the benchmark index. As of September 2020, the fund has generated a 10-year annualized return of 13.48%.
Fund managers have the flexibility to invest in domestic and foreign issuers as they see fit, although the investment mix is focused within the United States. The majority of the fund's assets are held in giant-cap securities, followed by large-cap positions and minimal exposure to mid- and small-cap equities. Information technology stocks make up the largest sector weighting at 27.32%, followed by financial services stocks at 8.85%, and consumer discretionary stocks at 13.01%. Top holdings within the fund include Apple, Microsoft, Amazon.com, Facebook Inc., Berkshire Hathaway Inc., and Alphabet Inc. The fund has a relatively low net expense ratio of 0.39%.
Schwab Core Equity Fund
The Schwab Core Equity Fund started in July 1996 and holds $2.1 billion in net assets. The fund seeks to provide investors with long-term capital growth by investing primarily in domestic equities. Substantially all of the mutual fund's assets are invested in securities of domestic issuers with market capitalizations no less than $500 million. Fund managers seek to outperform the overall S&P 500 Index over time. As of June 2020, the fund has generated a 10-year annualized return of 12.29%.
While all of the fund's portfolio is composed of domestic equities, fund managers offer some diversification through sector exposure. Technology securities make up 29.2% of the investment mix, followed by health care stocks at 14.8%, financial services stocks at 9.5% and consumer discretionary stocks at 12.6%. Top holdings with the Schwab Core Equity Fund include Apple, Microsoft, Amazon.com, Facebook Inc. and Alphabet (GOOGL). The fund has a net expense ratio of 0.74%.
BlackRock Advantage Large-Cap Core Fund
The BlackRock Advantage Large-Cap Core Fund was established in December 1999 and has $2,662.9 million in investor assets. Fund managers seek to provide investors with long-term capital growth by investing the majority of the fund's net assets in equity securities of large companies. The investment mix consists of mostly common stock of domestic issuers found within the Russell 1000 Index. As of June 2020, the fund has generated a 10-year annualized return of 12.81%.
Sector diversification is most heavily weighted in information technology stocks, making up 27.1% of the portfolio. Health care stocks comprise 14.2%, followed by consumer discretionary stocks at 11.7% and financial services stocks at 10.0%. Top holdings within the fund include Microsoft, Apple, Amazon.com and Alphabet. The net expense ratio for the core mutual fund is 0.48%.