An exchange-traded fund (ETF) that aims to invest in a market’s largest companies (large cap). Large cap companies are subject to certain criteria in terms of size (market capitalization): the total value of all the company’s stock exceeds a minimum level of $20 billion. Large-caps ETFs present an investment vehicle whereby exposure is established to the world’s biggest, and most successful, companies without having to undertake the cumbersome analysis and screening for individual companies (in order to select the best performers and well run ones).
Large-caps range from less known picks to the household names (world famous companies- e.g., Microsoft, Google, Apple, etc). Large-cap ETFs are typically concentrated in the largest companies, with certain, limited allocations to smaller companies. Large-cap companies appeal to investors for several reasons including deep pockets (financial and operational resources), high performance, plenty of cash (cash cow status), low volatility of price, and competitive advantage.
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