Vanguard Growth ETF vs. Vanguard Mega Cap Growth ETF: How They Compare on Costs, Returns, and Risk

Both the Vanguard Growth ETF (NYSEMKT:VUG) and the Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) people the assertive maturation conception of the U.S. equity market, emphasizing companies with robust net and gross potential.

While they stock akin concern philosophies, this examination highlights whether an capitalist whitethorn similar the broader diversification of VUG oregon the narrower mega-cap absorption provided by MGK.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

Both funds are low-cost options, though VUG is somewhat much affordable with a little disbursal ratio. Investors looking for higher payouts whitethorn similar VUG, which offers a somewhat higher dividend yield.

Performance & hazard examination

What's wrong

MGK contains 59 holdings and provides concentrated vulnerability to the largest maturation stocks successful the U.S. market. Its assemblage allocation leans heavy toward technology, accounting for 55% of assets, followed by connection services and user cyclical. Its largest positions see Nvidia, Apple, and Microsoft.

VUG tracks a broader acceptable of 153 holdings. Its assemblage illustration is similar, with exertion astatine 53%, with connection services and user cyclical rounding retired the apical 3 sectors. Its apical holdings are besides Nvidia, Apple, and Microsoft, matching MGK.

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What this means for investors

While some VUG and MGK absorption connected large-cap maturation stocks, their differences successful diversification and money size could beryllium meaningful for immoderate investors.

MGK is overmuch narrower, with less than fractional the holdings of VUG. It focuses solely connected mega-cap stocks, which are mostly defined arsenic companies with a marketplace headdress of astatine slightest $200 cardinal — importantly larger than the $10 cardinal threshold for large-cap stocks.

Although its apical sectors and holdings lucifer VUG, it assigns greater value to those stocks. Nvidia, Apple, and Microsoft marque up 35.31% of MGK’s portfolio, compared to 34.73% for VUG.

It’s a flimsy difference, but it could impact show if those peculiar stocks over- oregon underperform going forward. Historically, it hasn’t made a important impact, arsenic the 2 funds person earned astir identical one-year full returns and precise akin five-year max drawdowns.