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Large cap is short for large market capitalization, which typically defined as meaning publicly traded companies with a market capitalization of around $10 billion or more. This cutoff for large cap companies changes over time and is not authoritatively defined. The purpose of the large cap definition is to separate the very largest public companies from all others. In addition to large cap stocks, the market capitalization includes mid cap stocks, small cap stocks, micro cap stocks, and occasionally nano cap stocks. The term large cap can also be used to describe a mutual fund’s investment strategy. A large cap mutual fund invests only in large cap stocks. An example would be any index fund that tracks the Dow Jones Industrials. The best known large cap stocks are sometimes referred to as blue chip stocks. |
