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5 Top Large-Cap ETFs for 2017

By Matthew Frankel, CFP® - Jun 17, 2017 at 8:02AM

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Here are five great ways to invest in American business without picking individual stocks.

Large-cap stocks are generally considered to be those with market capitalization of $10 billion or greater. Generally, these are less volatile than small- or mid-cap stocks, and large-cap ETFs that track stock indexes are a good way to invest in American business without putting too much of your money into any one company.

Price wars among providers of passively managed index funds have resulted in some of the lowest ETF expense ratios in history. If you don't have the time, knowledge, or desire to pick your own stocks, index funds can be the smartest way to get stock exposure in your portfolio. In fact, Warren Buffett has said that low-cost index funds are the best investment most Americans can make.

With that in mind, here are five index funds that track various large-cap stock indices.

Name

ETF Symbol

Recent Share Price

Dividend Yield

Expense Ratio

Vanguard S&P 500 ETF

VOO

$224.04

1.84%

0.04%

Schwab U.S. Large-Cap Growth ETF

SCHG

$63.56

1.12%

0.04%

Schwab U.S. Large-Cap Value ETF

SCHV

$50.74

3.10%

0.04%

Vanguard High Dividend Yield Index Fund ETF

VYM

$79.26

2.88%

0.08%

Vanguard Mega Cap Index Fund ETF

MGC

$83.61

1.91%

0.07%

Data Source: TD Ameritrade. Prices, dividend yields, and expense ratios current as of 6/14/17.

Here's what these ETFs invest in

1. Vanguard S&P 500 ETF

As the name implies, the Vanguard S&P 500 ETF (VOO 3.11%) invests in the 500 companies that make up the Standard & Poor's 500 index. One of the largest funds in the world with $316 billion in total net assets, the ETF invests in the S&P components on a weighted basis, just as the index considers them. In other words, the largest components of the index make up more of the fund's holdings. The five largest holdings of the ETF, as of this writing, include Apple, Alphabet, Microsoft, Amazon.com, and Facebook.

Stock exchange data on a screen.

Image source: Getty Images.

2. Schwab U.S. Large-Cap Growth ETF

The Schwab U.S. Large-Cap Growth ETF (SCHG 3.45%) tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. Simply put, this fund invests in large-cap stocks that are growing at faster-than-average rates. Generally speaking, growth stocks pay relatively low dividends, or none at all, instead investing their profits back into the business to fuel further growth. As of this writing, the fund invests in a total of 421 different stocks, with top holdings that include Apple, Amazon.com, Facebook, and Berkshire Hathaway. (Note: Notice that there is significant overlap among several of these funds' holdings.)

3. Schwab U.S. Large-Cap Value ETF

As opposed to growth stocks, value stocks tend to be mature, dividend-paying stocks that trade at below-average valuations. These tend to be less volatile than growth stocks, but typically have less upside potential over the long run. The Schwab U.S. Large-Cap Value ETF (SCHV 2.84%) tracks the Dow Jones Large-Cap Value Total Stock Market Index, and invests in 376 stocks. The fund's top holdings are Microsoft, Johnson & Johnson, ExxonMobil, and JPMorgan Chase.

4. Vanguard High Dividend Yield Index Fund ETF

Intended for income-seeking investors, the Vanguard High Dividend Yield Index Fund ETF (VYM 2.66%) invests in 428 stocks with above-average dividend yields, specifically excluding real estate investment trusts (REITs). Top holdings include Microsoft, ExxonMobil, Johnson & Johnson, JPMorgan Chase -- the same four top holdings as the value fund I discussed. You can read an in-depth look at the fund here.

5. Vanguard Mega Cap Index Fund ETF

The Vanguard Mega Cap Index Fund ETF (MGC 3.08%) invests in the largest of the large-cap stocks in the market, and includes growth and value stocks. As of April 30, 2017, the fund has 276 stocks in its portfolio, and top holdings are the same as the S&P 500 fund. The only big difference is that roughly the bottom half of the S&P 500 is excluded, and the basic idea is that larger companies will result in more stability.

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Stocks Mentioned

Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF Stock Quote
Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF
VYM
$103.31 (2.66%) $2.68
Vanguard Index Funds - Vanguard S&P 500 ETF Stock Quote
Vanguard Index Funds - Vanguard S&P 500 ETF
VOO
$360.00 (3.11%) $10.87
Schwab Strategic Trust - Schwab U.S. Large-Cap Value ETF Stock Quote
Schwab Strategic Trust - Schwab U.S. Large-Cap Value ETF
SCHV
$63.67 (2.84%) $1.76
Schwab Strategic Trust - Schwab U.S. Large-Cap Growth ETF Stock Quote
Schwab Strategic Trust - Schwab U.S. Large-Cap Growth ETF
SCHG
$61.13 (3.45%) $2.04
Vanguard World Fund - Vanguard Mega Cap ETF Stock Quote
Vanguard World Fund - Vanguard Mega Cap ETF
MGC
$136.49 (3.08%) $4.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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