VOOG vs. MGK: Is S&P 500 Diversification or Mega-Cap Growth Better for Investors?

The Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) and the Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) stand out for their similar costs and tech-heavy portfolios, but differ in diversification, yield, and recent risk-return profiles.

Both funds aim to capture U.S. large-cap growth stocks. MGK tracks the CRSP US Mega Cap Growth Index, focusing on the largest growth companies, while VOOG tracks the S&P 500 Growth Index, offering a broader basket. This match-up explores how their approaches may appeal to different types of growth-focused investors.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

Both MGK and VOOG are equally affordable with matching fees, but VOOG offers a marginally higher dividend yield that may appeal to investors seeking a bit more income from their growth allocation.

Performance & risk comparison

What's inside

VOOG casts a wider net, holding 217 stocks and tracking the S&P 500 Growth Index. The portfolio leans 44% toward technology, with communication services and consumer cyclicals also prominent. Its largest positions include Nvidia, Microsoft, and Apple, each making up less than 15% of the fund's total assets.

MGK is even more concentrated in technology. It holds only 66 stocks, with 57% of those holdings allocated to the tech sector. Its top three holdings mirror VOOG's, but combined they make up a slightly larger slice of the fund than in VOOG. Both funds avoid leverage and specialty tilts.

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Foolish take

VOOG and MGK both aim for above-average growth, and they've experienced similar one-year and five-year total returns. They also offer the same expense ratio and similar dividend yields, so the main differentiator between them is their risk profile.

VOOG contains large-cap stocks within the S&P 500 that have strong growth characteristics. MGK takes a more targeted approach, including only mega-cap stocks with growth potential. Mega-cap stocks are generally defined as those with a market capitalization of at least $200 billion, compared to the $10 billion cutoff for large-cap stocks.

MGK offers less diversification than VOOG with far fewer holdings, which can increase its risk. It may experience steeper drawdowns during periods of market volatility, particularly due to its significant tilt toward the technology sector. However, because tech stocks have more potential for explosive growth, there's also a greater chance of outperforming VOOG when the tech industry is booming.

Glossary

ETF: Exchange-Traded Fund; a fund that trades on stock exchanges like a stock.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Expense ratio: Annual fee, as a percentage of assets, that investors pay to own a fund.
Drawdown: The percentage decline from a fund’s peak value to its lowest point over a period.
Beta: A measure of a fund’s volatility compared to the overall market, typically the S&P 500.
AUM: Assets Under Management; the total market value of assets a fund manages.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Growth stocks: Companies expected to grow earnings faster than the market average.
Index (in this context): A benchmark measuring the performance of a group of stocks, which a fund may track.
Max drawdown: The largest observed loss from a fund’s peak to its trough over a specific period.
Leverage: Using borrowed money to increase investment exposure, which can amplify gains and losses.
Specialty tilt: A fund’s intentional focus on a specific sector, style, or strategy beyond broad market exposure.

Katie Brockman has positions in Vanguard Admiral Funds - Vanguard S&P 500 Growth ETF. The Motley Fool has positions in and recommends 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.