what is large cap

What are the top 3 ETFs in the large cap category

This article will look into the three best large cap categories of ETFs. But before that, let’s understand what large-cap is.

What is large-cap? 

Even if they’re young, large-cap corporations are likely to be well-established and dominating in their respective industries. Some corporations go public and have a market cap of more than $10 billion right away.  

A corporation having a market capitalization of more than $10 billion is known to be a large-cap (or “big cap”). According to the Wilshire 5000 Overall Market Index, large-cap companies account for roughly 93 per cent of the total U.S. equity market. 

Large-cap corporations are usually well-known, having a track record of generating high-quality goods and services. Many of these businesses have grown their businesses beyond the United States and may have a diverse business that spans multiple industries.  

As these businesses seek to expand, they will look for possibilities to buy smaller businesses or even consolidate with competitors of similar size. Large-cap companies are less volatile and less susceptible to significant price movements. As a result, large-cap stocks are a safer investment option. 

Key indices to track the large cap market 

Dow Jones Industrial Average

Apart from transportation and utilities, the DJIA exclusively analyses the performance of 30 businesses considered “blue chips,” or those that are dominating champions in their respective industries. The DJIA is not indicative of the large-cap market as the S&P 500 Index. a

S&P 500

Even though it focuses primarily on the large-cap sector, the S&P 500 is the benchmark for the U.S. stock market.  

This index measures the performance of the 500 most significant and most profitable corporations in the United States across 11 distinct industries.

Top 3 ETFs in the large cap category 

Rank ETF
1 Schwab International Equity ETF 
2 BlackRock U.S. Carbon Transition Readiness ETF 
3 Schwab Emerging Markets Equity ETF 

Schwab International Equity ETF  

SCHF delivers a market-like basket of worldwide stocks. The fund’s portfolio closely resembles our benchmark in performance statistics and sector coverage.  

SCHF removes most of the small-caps in our standard, although this hasn’t substantially influenced performance. The fund is also unique because it includes South Korea. Korean shares wind up in the basket because the fund’s index classifies South Korea as an advanced nation. 

Unlike many of its competitors, it also carries Canadian stocks. The MSCI ESG Fund Rating for the Schwab International Equity ETF is AAA, based on 8.93 out of 10.  

The MSCI ESG Fund Rating assesses a portfolio’s long-term resistance to risks and opportunities posed by environmental, social, and governance variables.

Performance 
Performance [as of 14/03/22]1 year3 years5 years10 years
SCHF-5.52%6.52%6.33%5.65%
MSCI World ex USA IMI Index-3.89%6.67%6.37%5.86%
SCHF Top 10 Countries’ exposure
Schwab International Equity ETF Large Cap

Source: etf.com

SCHF Top 10 Holdings
Schwab International Equity ETF Holding Large Cap

 Source: etf.com

SCHF Details
BrandSchwab
Expense Ratio0.06%
YTD Return-10.91%
AUM$27.25B
Number of Holdings1491
Avg. Spread ($)$0.01
Average Daily $ Volume$309.56M

BlackRock U.S. Carbon Transition Readiness ETF 

Firstly, LCTU strives to outperform its index, the Russell 1000 Index, a broad equity index comprising the 1,000 largest U.S. corporations. The fund employs proprietary scoring criteria to evaluate companies’ readiness for a low-carbon economic transition in comparison to their industry peers when selecting shares from the Russell 1000.  

Five categories make up the ‘transition ready‘ score: fossil fuels, clean technology, energy management, waste management, and water management.  

LCTU favours high-scoring companies while minimizing risk. Firms may also be evaluated on their governance in addition to their strategy. The fund adviser may invest in Russell 1000 securities that aren’t necessarily green economy investments despite the low-carbon orientation.  

The MSCI ESG Fund Rating for BlackRock U.S. Carbon Transition Readiness ETF is A.A., based on 8.02 out of 10. The MSCI ESG Fund Rating assesses a portfolio’s long-term resistance to risks and opportunities posed by environmental, social, and governance variables. 

Performance
Performance [as of 14/03/22]1 month3 monthsYTD
LCTU-5.37%-10.67%-13.31%
No underlying index.

The fund performed poorly not because of its inherent structure but due to the volatile markets and emerging uncertain geopolitical situations as of March 2022. 

The fund invests entirely in the USA. 

LCTU Top 10 holdings
BlackRock U.S. Carbon Transition Readiness ETF Large Cap

 Source: etf.com

LCTU details
BrandBlackrock
Expense Ratio0.14%
YTD Return-13.31%
AUM$1.34B
Number of Holdings329
Avg. Spread ($)$0.05
Average Daily $ Volume$215.49K

Schwab Emerging Markets Equity ETF  

According to FTSE, SCHE follows the FTSE Emerging Index, which comprises large and midcap companies from emerging market countries. Market capitalization is used to choose and weight stocks.  

South Korea is not a part of the index as an emerging market, notable from other comparable indices. Instead, countries like India and China have gained more clout. Every March and September, components are assessed on a semi-annual basis.  

The MSCI ESG Fund Rating for the Schwab Emerging Markets Equity ETF is BBB, based on 5.56 out of 10. The MSCI ESG Fund Rating evaluates a portfolio’s long-term resistance to risks and opportunities posed by environmental, social, and governance variables.  

The best ESG Fund Rating is AAA, while the poorest ESG Fund Rating is the worst (CCC). 

Performance
Performance [as of 14/03/22]1 year3 years5 years10 years
SCHE-18.35%2.69%4.52%2.33%
MSCI Emerging Markets Investable Market Index-17.99%3.31%4.98%2.53%
SCHE Top 10 countries
Schwab Emerging Markets Equity ETF. Large Cap

Source: etf.com

SCHE Top 10 holdings
Schwab Emerging Markets Equity ETF Holdings Large Cap

Source: etf.com

 SCHE Details
BrandSchwab
Expense Ratio0.11%
YTD Return-13.54%
AUM$8.51B
Number of Holdings1708
Avg. Spread ($)$0.01
Average Daily $ Volume$75.29M

One should look out at these ETFs before investing in the large-cap category in the USA.

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