Vanguard Mega-Cap Growth ETF: Investing in America's Largest and Fastest-Growing Companies

The Vanguard Mega Cap Growth ETF (MGK) is a passively managed ETF that tracks the CRSP US Mega Cap Growth index, representing the largest 70% of the broader CRSP US Total Market index. It is heavily weighted toward innovative sectors like technology, communications, and consumer discretionary. The ETF includes companies with strong fundamentals, featuring high average earnings growth rates and impressive return on equity ratios.

The Vanguard Mega Cap Growth ETF (MGK) is a passively managed ETF that tracks the CRSP US Mega Cap Growth index, representing the largest 70% of the broader CRSP US Total Market index. This ETF is heavily weighted toward innovative sectors such as technology, communications, and consumer discretionary. It includes companies with strong fundamentals, featuring high average earnings growth rates and impressive return on equity ratios.

Key Features of Vanguard Mega Cap Growth ETF (MGK)

1. Index Tracking: MGK seeks to replicate the performance of the CRSP U.S. Mega Cap Growth Index, which is a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of mega-capitalization growth stocks in the United States [1].

2. Low Expense Ratio: MGK has an expense ratio of 0.07%, making it one of the most cost-effective ETFs in its category [1].

3. Sector Weightings: The ETF is heavily weighted toward the technology sector, with a significant portion of its holdings concentrated in large technology companies [1].

4. Top Holdings: As of July 3, 2025, the top 10 holdings of MGK include Microsoft, Apple, NVIDIA, Amazon, and Meta Platforms [1].

Benefits and Risks

# Benefits

- Low Costs: The ultra-low expense ratio of 0.07% makes MGK an attractive option for cost-conscious investors [1].
- Tax Efficiency: With a 0.38% 30-day SEC yield, MGK is relatively tax-efficient, particularly for long-term holders [1].
- Liquidity and Performance: MGK is highly liquid and has a long performance track record, with notable historical returns [1].

# Risks

- Concentration Risk: The ETF is heavily concentrated in technology stocks, with the top 10 holdings making up over half of the total weight [1].
- Valuation Risk: The stretched valuations across the portfolio, with a P/E ratio of 38.3 and a P/B ratio of 12.7, leave little margin for error [1].
- No Income Generation: MGK is not an income-generating fund and offers minimal dividend yield, making it more suitable for capital appreciation [1].

Historical Performance

MGK has shown strong performance over various time periods, with 1-year, 3-year, 5-year, and 10-year total returns (including dividends reinvested) ranging from 17.18% to 27.02% [1].

Conclusion

The Vanguard Mega Cap Growth ETF (MGK) offers investors a cost-effective way to gain exposure to the largest U.S. growth stocks. With its low expense ratio, strong historical performance, and focus on innovative sectors, MGK is a suitable option for investors with a high risk tolerance and a long-term investment horizon. However, investors should be aware of the concentration risk and stretched valuations before making a decision to invest.

References

[1] https://money.usnews.com/funds/etfs/large-growth/vanguard-mega-cap-growth-etf/mgk
[2] https://www.fool.com/investing/how-to-invest/etfs/how-to-invest-in-vanguard-mega-cap-growth-etf-mgk/