Large-cap stock and exchange traded funds (ETFs) could be poised for a comeback, but will fervent investors still put their faith into a beaten-down large-cap market?

Traditionally more defensive in nature compared to small and mid-sized company equities, large-cap ETFs have shaved some of their former bulk with ETFs such as:

• iShares Morningstar Large Core Index (JKD): down 34% year-to-date

• Vanguard Large Cap ETF (VV): down 39.3% year-to-date

The results of these two ETFs and others correspond with large-blend mutual funds, tracked by Morningstar, which are down on average by 41%, reports Billy Fisher for The Street. The main benefits for ETFs, though, are their lower taxes and access to a diverse set of asset classes.

Current market conditions are believed to be ripe because large-caps are in favor with conditions with great net creditors instead of net debtors. Small-caps may have a little more risk, as they’re not as established as large-caps, but as times change, smaller companies can bend and flex a little better because they don’t have all the bureaucracy that a large-cap might.

If these statements prove true, watch those large-caps to see if and when they touch on their short- and long-term trend lines. Only then will they be worth considering whether they work in your portfolio.

Tags: JKD, Large-Cap, Mutual Funds, VV