Large-cap stocks are showing up cheap relative to their small-cap counterparts, giving related exchange traded funds (ETFs) a chance for growth when the markets recover.

Despite the valuations, do not be fooled, there is still some uncertainty with large-caps and the market in general. The economy is not settled yet, and may sink more. The presidential elections have a lot to do with the future of capital gains rates, as well, reports Billy Fisher for The Street. Furthermore, large-caps have fallen off so much because of their heavy exposure to the beleaguered financial industry.

Small-caps are performing better because they don’t have the exposure to the Lehmans and the AIGs.

As a sign of the time for financials and large caps: AIG (AIG) has been booted out of the Dow Jones Industrial Average and replaced with Kraft (KFT). Kraft is the world’s second-largest food maker, and its addition to the fund leaves the Dow underweight in financials, reports Dow Jones Newswires.

The most beaten-down areas provide the best opportunity for growth when there’s a market recovery in the works. When that happens, it’s worth keeping an eye on those sectors. Large-cap ETFs provide even and affordable exposure to large-cap shares such as:

• iShares S&P 500 Growth Index (IVW), down 15.1% year-to-date
• iShares S&P 500 Index (IVV), down 16.1% year-to-date
• iShares S&P 500 Value Index (IVE), down 17% year-to-date

Investors shouldn’t consider entering this or any other asset class until they are above their trendlines. So far, large-cap value is down 9.4% for the past six months, blend is down 7.1%, and growth is down 4.5%.

Tags: Dow Jones Industrial Average, Financial, IVE, IVV, IVW, Large-Cap, Sector ETFs, Small-Cap