Depending on who you ask, large-cap stocks have a market capitalization above $5 billion, $8 billion or $10 billion. Regardless of the cap cutoff you choose, large caps are definitely the biggest fish in the equities pond. When you think of most household names, chances are good that they're large caps – Apple Inc. (AAPL), Microsoft Corporation (MSFT) and The Coca-Cola Company (KO), to name a few.
Large-cap stocks are generally considered good bets for long-term investment strategies, particularly for buy-and-hold investors who are looking for stability that is often sweetened with a dose of dividend yield to balance the portfolio. Because of their size, large caps are less likely to succumb to economic pressures and conditions that can interrupt operations and drive down profits for smaller organizations. (See also: What Are Common Advantages of Investing in Large Cap Stocks?)
If you're looking for some large-cap exposure for your IRA or another investment account in 2018, exchange-traded funds (ETFs) offer a great alternative to choosing individual equities. ETFs are generally cheap to own and have high liquidity, making them suitable for any type of investor.
In 2017 large cap growth and technology stocks significantly outperformed in the large cap category with their momentum expected to continue into 2018. A number of factors are helping to fuel gains in technology and growth stocks. Catalysts include e-commerce, cloud computing, artificial intelligence, an improving economy and the passing of U.S. tax reform. Speculators believe savings from tax reform could help tech and growth companies to invest tax savings on greater research and development.
Here are four of the best performing large-cap ETFs for your portfolio in 2018. These funds offer diversified investment in some of the most prominent technology and growth stocks.
Note: Funds were chosen based on U.S. investment, performance and assets under management. The data is as of December 19, 2017. Funds do not include leveraged ETFs.
- One-Year Return: 36.93%.
- Price: $166.40
- Yield: 0.98%
- Average Volume: 512,069
- Assets under Management: $17.43 billion
- Fee: 0.10%
For the one-year period through December 19, 2017, the Vanguard Information Technology ETF reported a return of 36.93%. VGT seeks to track the MSCI U.S. Investable Market Information Technology 25/50 Index. This Index includes U.S. companies in the GICS information technology category. The Index is monitored quarterly to ensure that 25% of the value is not invested in a single issuer and also that companies accounting for 5% or greater of the Index do not exceed 50%.
The Fund has 369 holdings with the largest portion of stocks allocated to internet software and services at 19.4%. As of November 30, 2017, the Fund’s top holdings were Apple Inc., Alphabet Inc. and Microsoft Corp.
- One-Year Return: 34.28%
- Price: $64.50
- Yield: 1.34%
- Average Volume: 9,444,866
- Assets under Management: $19.62 billion
- Fee: 0.14%
The Technology Select SPDR Fund had a one-year return of 34.28% as of December 19, 2017. XLK seeks to replicate the holdings of the stocks in the S&P 500 technology sector. As of December 19, 2017, the technology sector has been the best performing sector in the S&P 500 on a one-year basis with the next best performing sector being health care at a one-year gain of 22.01%.
XLK has 71 holdings. Top holdings in the Fund are Apple, Microsoft and Facebook. The ETF offers a low expense ratio of 0.14%.
- One-Year Return: 29.18%
- Price: $135.45
- Yield: 1.15%
- Average Volume: 1,376,849
- Assets under Management: $40.55 billion
- Fee: 0.20%
IWF seeks to replicate the Russell 1000 Growth Index. This Index includes companies from the Russell 1000 that have been screened for growth characteristics. The Fund includes 554 holdings. Top holdings in the Fund are Apple, Microsoft and Amazon.
The one-year performance of the Fund is 29.18%. This Fund has outperformed the one-year return of the Russell 1000 Index with a gain of 17.91%.
- One-Year Return: 27.31%
- Price: $141.55
- Yield: 1.19%
- Average Volume: 585,217
- Assets under Management: $31.91 billion
- Fee: 0.06%
The Vanguard Growth ETF seeks to replicate the CRSP U.S. Large Cap Growth Index. The Index screens large-cap stocks for a number of factors including: future long-term growth in earnings per share, future short-term growth in earnings per share, three-year historical growth in earnings per share, three-year historical growth in sales per share, current investment-to-assets ratio and return on assets.
The Fund has a one- year return of 27.31%. The ETF includes 313 stocks with a high concentration in technology and consumer services. Top holdings in the Fund include Apple Inc., Alphabet Inc. and Amazon.com Inc.