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American Funds Washington Mutual

(AWSHX) - Get Report


Dreyfus Appreciation

(DGAGX) - Get Report


Marsico Focus

(MFOCX) - Get Report

may be the best bets as an economic rebound lifts prospects for large companies such as


(MRK) - Get Report



(XOM) - Get Report


Wal-Mart Stores

(WMT) - Get Report


Since the stock-market rally began in March, big-company stocks have lagged behind. So-called large-blend funds, which hold both growth and value shares, have returned 20% this year, trailing small-cap blend by 5 percentage points and mid-cap blend by 10 points, according to fund-rating firm Morningstar.

Convinced that the worst of the economic and stock-market turmoil has passed, investors have raced to take on more risk, favoring small companies. But, soon enough, large stocks could take the lead, as they tend to do in this stage of the economic cycle. Many giants sell at modest values. DOW P/E VS NASDAQ? And big multinationals stand to gain from growing export sales to China and other emerging markets.

To implement this strategy, consider funds that focuses on the biggest of the big companies. A top choice for conservative investors is a large-value fund. While stocks in the benchmark

S&P 500 Index

have an average market capitalization of $36 billion, Washington Mutual's is $44 billion.

The fund buys companies that have paid dividends in nine of the past 10 years. Seeking stable dividend payers, the portfolio managers pick what they perceive as solid companies with reliable cash flows. A diehard value specialist, the fund avoids the most expensive shares.

Big holdings include Merck and

Johnson & Johnson

(JNJ) - Get Report

, pharmaceutical stocks that have been held back by concern about the Obama administration's health-care reform plans. Other names in the portfolio are

Kraft Foods




(KO) - Get Report

, consumer companies that have suffered relatively little damage during the recession.

A steady performer in hard times, Washington Mutual outperformed the S&P 500 in 2008 and during the stock-market crash that began in 2000. The fund has returned 1.6% annually during the past decade, surpassing the S&P 500 by 1.9 percentage points.

Another cautious selection is Dreyfus Appreciation, a large-blend fund with a hefty average market capitalization of $81 billion. Manager Fayez Sarofim seeks out dominant companies that have long track records for delivering solid earnings. Following its careful approach, the fund has achieved an intriguing record during the past decade: matching the returns of the S&P 500 while taking less risk as measured by standard deviation, an indication of how much an investment bounces up and down.

Sarofim aims to buy stocks when they have slipped out of favor. But once it buys, Dreyfus Appreciation rarely sells, even after the stocks have soared. The annual turnover of the fund is less than 10%, so many stocks remain in the portfolio for more than a decade.

Holdings include rock-solid oil companies, such as ExxonMobil and


(CVX) - Get Report

. Sarofim favors consumer businesses with familiar brands and loyal customers. Big consumer holdings include


(NSRGY) - Get Report



(PEP) - Get Report


Procter & Gamble

(PG) - Get Report


Investors who can tolerate more risk ought to consider Marsico Focus, a large-growth fund with an average market capitalization of $59 billion. Manager Tom Marsico looks for companies that will enjoy solid earnings growth because of economic trends.

When he finds a promising stock, Marsico is willing to bet heavily. The fund owns only around 30 stocks, often putting a quarter of assets into the five largest holdings.

Convinced that consumers will continue shifting to lower-cost goods, Marsico holds Wal-Mart Stores and hamburger giant


(MCD) - Get Report

. He has a big position in


(GOOG) - Get Report

, which should continue to enjoy rising sales as advertising shifts to the Internet and search volume increases. Such big stocks could lead the parade if the market continues recovering.

Stan Luxenberg is a freelance writer who specializes in mutual funds and investing. He was formerly executive editor of Individual Investor magazine.