Battle of the Tech Giants: Is MGK or VUG the Better ETF for Long-Term Growth?

The Vanguard Growth ETF (NYSEMKT:VUG) and the Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) both offer broad U.S. growth exposure, but with different approaches: VUG tracks a wider basket of large-cap growth names, while MGK zeroes in on the largest mega-cap growth stocks.

Investors comparing these two may want to weigh differences in sector tilts, portfolio concentration, and cost.

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.

VUG is more affordable on fees with a lower expense ratio than MGK, though both are among the cheapest index ETFs. Dividend yields are also similar, but VUG offers a slight edge for income-focused investors.

Performance & risk comparison

Over the past five years, MGK delivered a higher total return. However, both funds experienced similar maximum drawdowns, suggesting comparable downside risk during market stress.

What's inside

MGK focuses on mega-cap growth stocks and holds just 66 companies, with technology making up 58% of assets. Its top holdings are Nvidia, Apple, and Microsoft. With a heavy concentration in tech, this fund's performance is closely tied to the largest U.S. tech names.

By contrast, VUG is spread across 160 large-cap growth stocks, with a sector mix of 53% technology, 14% communication services, and 14% consumer cyclical. Its leading positions are also Nvidia, Apple, and Microsoft, but each makes up a smaller slice of the portfolio compared to MGK. This broader diversification may appeal to those wanting less exposure to tech mega-caps.

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What this means for investors

Both VUG and MGK are focused on tech-heavy growth, but VUG contains large- and mega-cap growth stocks, while MGK is focused exclusively on mega-caps.

Mega-cap stocks are the largest of the large, generally defined as companies with a market cap of at least $200 billion -- compared to the $10 billion threshold for large-cap stocks. These stocks are industry-leading juggernauts, which can add some stability, as they're often more likely to recover from market downturns.

That said, MGK's hyperfocus on a small selection of mega-cap growth stocks significantly limits its diversification. It's more heavily weighted toward the tech industry, and while its top three holdings match VUG's, those three stocks alone make up 38.26% of the fund's total assets -- compared to 33.51% for VUG.

Performance-wise, the two funds are similar. While MGK has slightly outperformed VUG in both 12-month and five-year total returns, the difference is marginal. With similar expense ratios and dividend yields, investors also won't notice a significant difference in fees or investment income.

The primary difference between the two comes down to diversification. Those seeking a greater focus on mega-cap growth might prefer MGK's targeted approach, while investors looking for more diversification within the growth sector might opt for VUG.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges and holds a basket of securities.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Assets under management (AUM): The total market value of all assets managed by a fund.
Mega-cap: Companies with extremely large market capitalizations, typically among the largest in the market.
Large-cap: Companies with a large market capitalization, generally considered to be $10 billion or more.
Growth stock: A stock expected to grow earnings or revenue faster than the market average.
Sector tilt: When a fund has a higher allocation to certain industries or sectors compared to a benchmark.
Portfolio concentration: The degree to which a fund's assets are invested in a small number of holdings.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of a security or fund's volatility compared to the overall market, often the S&P 500.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Katie Brockman has positions in Vanguard Index Funds - Vanguard Growth ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds - Vanguard Growth ETF. 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.