6 Best Large-Cap Index Funds Of May 2024 (2024)

Fidelity Investments disrupted the mutual fund industry in 2018 when the firm launched its ZERO line of no-expense-ratio funds. Since Fidelity ZERO Large Cap Index Fund’s launch in September 2019, the fund has offeredinvestors fee-free exposure to large-cap U.S. stocks. FNILX also lends its securities to boost income for the fund. Investors looking for a large-cap fund option for their portfolios would have a difficult time finding a more affordable option.

FNILX’s average annual returns has topped the average of its large-cap blend Morningstar category over the past one, three and five years. As is the case with many market capitalization funds, a big chunk of the fund’s portfolio is invested in its top 10 holdings, including roughly about 6% and 7% respectively in Microsoft (MSFT) and Apple (AAPL). That could hurt FNILX returns if any of the top holdings suffer a big decline.

Diversification helps smooth out the ups and downs in your portfolio’s performance. That’s a great reason to consider buying international large-cap companies. The Vanguard Developed Markets Index Fund owns companies with an average market cap barely half as big as its Morningstar category average. VTMGX’s average price-earnings ratio is roughly only 60% as high as the P/E ratio for the broad U.S. stock market, measured by the S&P 500 Index. Those comparisons makes VTMGX’s holdings overall look more nimble and like better bargains than bigger, more richly valued popular U.S. stocks.

Meanwhile, VTMGX offers a higher dividend yield than its peer group’s average and the S&P 500 Index.

VTMGX is widely diversified across the globe, with Japan and the United Kingdom holding the greatest weights in the fund.

The Fidelity U.S. Sustainability Index Fund fits the bill for ESG investors who prefer a low-fee, passive fund option. For those who worry that ESG investing hurts returns, know that this fund’s annualized returns outperformed the large-cap blend category’s average annual returns during the past one-, two-, three- and five-year periods.

Approximately 65% of FITLX is concentrated in the information technology, health care, consumer discretionary and financial sectors. Well-known large-cap firms dominate the top 10 holdings. Over the long term, the fund should perform similarly to its large cap blend category, despite low allocations to energy stocks and utilities, many of which fail to pass the FITLX’s ESG screens.

This Schwab fundamentally weighted large-cap index mutual fund captures U.S. large capitalization company returns. Its benchmark is the Russell RAFI US Large Company Index. That index differs from many benchmarks by weighting its member stocks by certain fundamental measures of company size other than by market capitalization. SFLNX’s fundamental measurements include adjusted sales, retained operating cash flow and dividends plus buybacks.

SFLNX’s investment strategy contrasts with the typical market capitalization weighting approach of most index funds. That predominant market-cap approach puts more money into higher-priced growth companies. It is biased away from value stocks. Does SFLNX’s approach work? SFLNX outperformed its Morningstar large-cap value category’s averages during the previous one-, two-, three-, five-, 10- and 15-year periods.

Dividend investors will love the Vanguard Dividend Appreciation Index Fund’s stable of quality holdings that have an impressive history of rising dividends. Well-known indexer Vanguard delivers with a very affordable expense ratio, seasoned management and a robust average earnings growth rate.

VDADX’s roughly 300 holdings offer broad diversification, diluting trouble for the portfolio overall when a company runs into trouble. The portfolio includes a mix of reasonably valued growth and value companies, in contrast with other large-cap growth funds. The portfolio allocations contrast with typical large-cap index funds, at roughly 20% information technology and very roughly 15% each in healthcare, financials and industrials. More conservative investors might appreciate this focus, which provides lower volatility than the category average.

The S&P 500 represents nearly 80% of the market capitalization of the U.S. stock market. For those who believe that markets are efficient and that costs matter, the Vanguard 500 Index Fund is among the best core funds available today—earning it a place on this list as well as our list of .

VFIAX owns roughly 500 stocks. Morningstar forecasts that VFIAX’s earnings growth rate over the next three to five years will top its Morningstar category average’s. Like the S&P 500 itself, nearly 30% of the fund’s money is at work in the information technology sector. The next three sectors are healthcare, financials and consumer discretionary. One downside is the fund’s strong weighting to IT—however, this isn’t a unique risk. Other picks on this list have a similar weighting.