Large-Cap Stock

Large-cap companies are usually well-established businesses with significant market share, broad operations and widely recognised brands. Many operate internationally. The exact size threshold for large-cap varies between markets and index providers.

Large-cap stocks make up most of the value of major stock market indices. Because most indices are weighted by market capitalization, the performance of the largest companies has a big influence on the index as a whole.

For example, in many markets, the ten largest companies may account for a substantial share of the total value of the main index.

Large-cap stocks are generally considered less risky than smaller companies. They tend to have more stable earnings, easier access to financing and more liquid shares, which can be bought and sold easily. Many pay regular dividends.

The trade-off is that their growth potential may be more limited, since it is harder for a very large company to keep growing quickly. Investors often hold large-cap stocks as the core of a diversified portfolio, sometimes alongside mid-cap and small-cap investments for additional growth potential.