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Our Picks

Hard-Hit Large-Cap Funds for Your Watchlist

Although these offerings have endured steep losses in the recent market tumble, they remain worthy top picks.

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The market has been riding a downhill slope for the past three weeks, but the sell-off really began to pick up steam late last week. Very little has emerged from this downward spiral unscathed, and there's no telling how much further stocks might fall before it's all over.

At the same time, the market inevitably overshoots on the downside, so it's not too early to start making a shopping list of prospective investments to add to on weakness. Morningstar's equity analysts think that the stocks in their coverage universe are trading at a sizable discount to fair value, and large caps appear to be particularly inexpensive, according to Morningstar's exchange-traded fund  Fair Value Quickrank tool. For example, high-quality names like  3M (MMM) and  Cisco Systems (CSCO) are highly undervalued according to our analysts.

Large- and mega-cap ETFs and index funds are one way to obtain unadulterated exposure to beaten-down (and potentially cheap) blue chips. Actively managed funds are another option. To help identify a preliminary watchlist, we turned to the  Premium Fund Screener to home in on large-cap mutual funds that have recently been hard-hit but are worth sticking by--or even adding to--in periods of market weakness.

Esther Pak does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.