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.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.