Investing in large-cap stocks may seem like a no-brainer, but as seen this year, there are still major risks unless you invest in the best mutual funds.

Just look at General Electric Company (NYSE:GE). The company has struggled to manage its far-flung businesses, and it looks like the dividend could also be in jeopardy.

As a result, GE stock is off a grueling 37% this year. This has happened despite the roaring bull market, which has lifted the markets to all-time highs.

The example of GE highlights why it is important to have diversification. A great way to do this is to invest in, you got it, mutual funds.

Although, you don’t want to just put your money in any ol’ mutual fund. The key is to find top-performing funds with expense ratios that won’t drive you out of house and home.

To see, let’s consider five standouts:

Best Mutual Funds: Vanguard Equity-Income Fund Investor Shares

Expense ratio: 0.26%
Portfolio: Large-cap value

Value investing generally requires a long-term view on things. Let’s face it, when stocks are out of favor, it can take a while for investors to see the potential. But hey, some of the world’s best investors take a value approach, such as Warren Buffett.

So one of the top mutual funds to consider is the Vanguard Equity-Income Fund Investor Shares (MUTF:VEIPX) fund, which has $29.4 billion in assets.

Interestingly enough, a key part of the strategy is to seek out companies that have provided sustainable dividend streams, which is often a good sign of strength. The result is that — during the past five years — VEIPX has posted a 13.64% average return.

A big plus is that the expense ratio is at a reasonable level, at 0.26%. The portfolio also has a roster of top-notch operators like Merck & Co., Inc. (NYSE:MRK) and Chevron Corporation (NYSE:CVX).

Best Mutual Funds: Fidelity Blue-Chip Growth Fund

Expense ratio: 0.7%
Portfolio: Large-cap growth

The perception is that the gains from large cap companies are modest. But the reality is something different. In fact, large cap stocks can be some of the top performers in the market, as seen with companies like Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB).

The good news is that there are variety of large-cap funds that have a focus on growth, such as the Fidelity Blue-Chip Growth Fund (MUTF:FBGRX) fund. For the past five years, it has generated an impressive average return of 17.95%. Actually, it is up about 30% so far this year.

The FBGRX fund has the benefit of Fidelity’s extensive network of stock analysts, who are seek out growth opportunities. The manager of the fund, Sonu Kalra, also has a long background in the technology industry.

But this does not mean that the portfolio is overly concentrated either. Some of the top holdings include non-tech names like Home Depot Inc (NYSE:HD) and Costco Wholesale Corporation (NASDAQ:COST).

Best Mutual Funds: Vanguard Large-Cap Index Fund Investor Shares

Expense ratio: 0.18%
Portfolio: Large-cap blend

Index funds are definitely red hot nowadays. Then again, they provide compelling advantages like broad coverage of a category as well as low expenses.

So one of the top index funds for large cap companies is the Vanguard Large Cap Index Fund Investor Shares (MUTF:VLACX) fund. Essentially, it invests in US stocks that represent the top 85% of the market capitalization. This comes to about 600 companies, with an average value of $84 billion. Some of the top holdings include JPMorgan Chase & Co. (NYSE:JPM), Johnson & Johnson (NYSE:JNJ) and Exxon Mobil Corporation (NYSE:XOM)

The fund also has a decent yield, at 1.79%. And yes, the expense ratio is at a very reasonable 0.18%.

Best Mutual Funds: Ivy International Core Equity Fund Class I

 

Expense ratio: 0.97%
Portfolio: Large-cap blend

Foreign markets are definitely a great source for finding attractive large-cap opportunities.

OK then, so what is a good fund to consider? Well, one is the Ivy International Core Equity Fund Class I (MUTF:ICEIX) fund, which has $6.8 billion in assets.

As for the performance, the ICEIX has generated average returns of 9.77% for the past five years. This is about 2% better than the relevant benchmark.

The fund — which has at least 80% of its net assets in equities — focuses on companies in developed European and Asian/Pacific Basin markets. Lead managers John Maxwell and Catherine Murray take a value approach but also look for positive long-term trends and other macro factors when making investment decisions.

Even though the expense ratio seems high — at about 0.97% — it should not be enough to say “no” to the fund. After all, the portfolio managers have a good track record.

What’s more, the expenses for operating a foreign fund are generally high because of travel costs and the need for having a base of operations outside the U.S.

Tom Taulli runs the InvestorPlace blog IPO Playbook and is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.