How Investors Can Gain Exposure to US Large-Cap Stocks

By Andy Arenbereg via

One of the most important decisions an investor can make is how to allocate their portfolio across asset classes. For many U.S. investors, one of the largest allocations is to U.S. large-cap stocks.

While some investors choose to invest in a handful of large-cap names, others want access to the entire universe of large-cap companies — as indicated by the investments in broadly diversified index funds, which hold hundreds of securities (e.g., S&P 500, Russell 1000 index based funds).

However, if investors want exposure to large U.S. companies, they should consider investing in more than just publicly listed companies. In a world where capital is readily available and regulatory frameworks may not favor long-term decision making, many of the world’s most innovative companies have chosen to stay private for an extended period of time.

For example, in the 1980s the typical private-growth company went public (IPO’ed) six years after their founding. Today, some companies stay private for 10 years or longer. As a result, a number of large-cap companies are staying out of the publicly traded U.S. equity universe.

Well-known Startups Staying Private … For Now

There are numerous examples of companies across industries that have chosen to remain private as their market capitalization crosses from small cap to large cap.

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