This Large-Cap Growth Fund Takes You Beyond the Mag 7

Key Points

• There's an inexpensive way to broaden your investment in large-cap growth stocks.

• The current 10 largest stocks are not likely to be the same in a few years.

• 10 stocks we like better than Vanguard World Fund - Vanguard Mega Cap Growth ETF ›

The "Magnificent Seven" megacap tech stocks have been just that in recent years -- magnificent. As a group they've climbed 98% over the past two years (versus a 46% gain for the S&P 500 index) and today account for about 34% of the market-cap weighted S&P 500 index.

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Each of those companies has a market cap of more than $1 trillion and they are all among the 10 largest publicly traded companies on the planet.

That's huge.

Best of all, those seven companies aren't going anywhere. They are involved in a lot of different technologies and sectors and, perhaps most important, most of them have invested heavily in artificial intelligence (AI), which is expected to deliver the next major wave of productivity gains to the global economy and add trillions of dollars to it.

But other stocks will emerge to rival the Magnificent Seven in the coming months and years. Count on it. It's happened over and over again throughout history. Just look back to the beginning of this century. Of the 10 largest publicly traded stocks from the year 2000, only one remains on the list today (hint: Bill Gates co-founded it ). The other nine have been displaced.

So while a smart investor will absolutely want exposure to the Magnificent Seven stocks, those investors who expect an eventual rotation in the top stocks (I'm one of them) will want to be invested in an expanded group of large growth stocks.

Image source: Getty Images.

An easy and cheap way to invest in growth stocks

And good news: There's an easy -- and cheap -- way to do that. It's called the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK)

The Vanguard-run fund tracks the US Mega Cap Growth Index and is a great way to have money in each of the 69 largest growth stocks in the U.S. market. It currently has more than $28 billion in assets under management.

The ETF is up almost 14% year to date including dividends (since Jan. 1, 2025) and nearly 31% over the past 52 weeks. Both returns beat the S&P 500.

Here are the fund's top four holdings and their approximate weight in the ETF:

• Nvidia: 14.5%
• Microsoft: 14%
• Apple: 11%
• Amazon: 7.7%

Beyond those four, no stock accounts for more than 5% of the fund, making it highly diversified.

The fund is tech heavy, as tech stocks dominate the growth category at the moment. But it also has significant holdings in consumer discretionary, healthcare, and industrials stocks, with smaller stakes in financials, real estate, and a few other sectors.

Best of all, this ETF is cheap. Its expense ratio is just 0.07%, far below the average of 0.93% for similar funds.

True, the MGK ETF's price-to-earnings (P/E) ratio, at around 41, makes it more expensive than owning the S&P 500, which has a P/E of about 25. But this fund is about growth stocks, which are expected to rise in the short term, so the higher ratio in this case is justified.

Bogle's genius

The Vanguard Group has been providing inexpensive ways to invest in and profit from the stock market since Jack Bogle founded the investment firm in 1974.

Bogle advised investors to invest, not speculate, in stocks, and preached that patience and avoidance of high broker fees were the keys to long-term success.

The Mega Cap Growth ETF is all about those values.

Smart investors should absolutely hold the Magnificent Seven stocks. But they should also hold the companies that are likely to displace them as the hottest investments in the coming years. This ETF is an inexpensive way to do that and is a win-win for investors.

And who knows? In a couple of years you may find yourself holding the next Magnificent Seven.

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Matthew Benjamin has positions in Microsoft. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.