Meet the Low-Cost Vanguard ETF That Has 20% of Its Holdings in Nvidia, Broadcom, and AMD
Key Points
The Vanguard Mega Cap Growth ETF is concentrated in the largest tech companies in the world.
Nvidia, Broadcom, and AMD make up about 20% of the fund all by themselves.
With stretched valuations, it could be a good idea to buy shares over time.
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Megacap technology stocks are starting to look a little expensive, especially after recent moves in stocks like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). It's tough to know which large tech stocks are trading for a fair valuation, which ones still have the most opportunities to grow, and which ones might be a little too expensive.
One solution is to invest in the megacaps through an ETF. Vanguard has an excellent choice, the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK). As the name suggests, this is an index fund that tracks an index of the largest growth stocks in the U.S. stock market.
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Image source: Nvidia.
With a rock-bottom 0.07% expense ratio, you'll only pay $7 in annual investment fees for every $10,000 in fund assets. This can be well worth it to get a diversified collection of the most successful businesses in the United States.
The Vanguard Mega Cap Growth ETF
The Vanguard Mega Cap Growth ETF tracks the CRSP U.S. Mega Cap Growth Index, which consists of 69 stocks. It is a weighted index, so larger companies account for more of the fund's assets than smaller ones. Companies range from market caps of $45 billion for Paychex (NASDAQ: PAYX) to about $4.5 trillion for the largest component, Nvidia.
As mentioned in the headline, about 20% of the fund's holdings are allocated to red-hot AI chip stocks Nvidia, AMD, and Broadcom (NASDAQ: AVGO). But it also has exposure to several other types of technology companies. To illustrate this, here's a look at its largest holdings:
|
Company (Symbol) |
Market Cap |
% of Vanguard Mega Cap Growth ETF |
|---|---|---|
|
Nvidia (NASDAQ: NVDA) |
$4.52 trillion |
14% |
|
Microsoft (NASDAQ: MSFT) |
$3.88 trillion |
13.1% |
|
Apple (NASDAQ: AAPL) |
$3.80 trillion |
12% |
|
Amazon (NASDAQ: AMZN) |
$2.35 trillion |
7.5% |
|
Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) |
$2.98 trillion |
5% |
|
Broadcom (NASDAQ: AVGO) |
$1.56 trillion |
5% |
|
Meta Platforms (NASDAQ: META) |
$1.77 trillion |
4.4% |
|
Tesla (NASDAQ: TSLA) |
$1.48 trillion |
3.4% |
Data source: CNBC, Vanguard. Market caps as of Oct. 7, 2025. Vanguard allocation data as of Aug. 31, 2025.
As mentioned, the fund has a 0.07% expense ratio, which covers the annual expenses of the fund's managers. This isn't a fee you have to pay, but it will be reflected in the performance of the ETF over time.
Should you buy shares of the fund?
As you might expect, the Vanguard Mega Cap Growth ETF has been an excellent performer for investors. Over the past 10 years, it has produced annualized returns of about 18.9%, an extraordinary level of performance to sustain for a decade. This means that if you had invested $10,000 a decade ago in this index fund, you'd have more than $56,000 now.
Having said that, just because the fund has performed so well doesn't mean that it will continue to do so for the next decade and beyond. And as mentioned, many megacap stocks are starting to look expensive. In fact, the average P/E ratio of the stocks in the Vanguard Mega Cap Growth ETF is 40 -- that's significantly higher than the 27.7 average P/E of the S&P 500.
To be sure, the growth rates of many of the companies in the table certainly justify elevated valuations. I'm not saying that these megacaps are too expensive or that a decline is imminent.
However, I would caution that there could be significant volatility ahead for this ETF. So, while it could be a great way to get exposure to the largest and most successful businesses in the United States, it could also be a good idea to gradually build a position over time instead of investing all at once. This way, you'll be in a great position to take advantage of any corrections but will also benefit if the ETF continues to perform well over the long run.
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Matt Frankel has positions in Advanced Micro Devices and Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom and 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.
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