Market-Wide Returns or Concentrated Growth: Where SPY and MGK Get Their Returns

State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) and Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) differ most in sector tilts and risk, with MGK leaning heavily into technology and growth while SPY offers broader diversification and a slightly higher yield.

SPY is designed for broad exposure to the U.S. large-cap market, tracking the S&P 500 Index across all major sectors. MGK, in contrast, targets the largest U.S. growth companies, resulting in a concentrated technology tilt. This comparison highlights how these choices play out in cost, returns, risk, and portfolio composition.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

Both ETFs are low cost, but MGK is slightly more affordable on expenses. SPY’s higher yield may appeal to those seeking more income from their core equity holding.

Performance & risk comparison

What's inside

MGK focuses on just 69 holdings and is driven by technology (55% of assets), with communication services and consumer cyclical stocks making up much of the rest. Top positions are heavily weighted toward NVIDIA Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), which together account for over a third of the fund. With an 18-year track record, MGK’s approach is to mirror the CRSP US Mega Cap Growth Index, resulting in notable concentration and a higher growth bias than broader market funds.

SPY, by contrast, holds over 500 companies and spreads exposure more evenly across sectors, with technology at 35%, followed by financial services and communication services. Its top holdings are the same big tech names as MGK, but with smaller individual weights, allowing for broader diversification and less single-stock risk. This makes SPY more representative of the U.S. large-cap landscape overall.

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What this means for investors

SPY and MGK are both large-cap U.S. equity ETFs, but they are built to deliver returns through different engines. The State Street SPDR S&P 500 ETF Trust tracks the full S&P 500 and reflects the market’s sector mix. The Vanguard Mega Cap Growth ETF concentrates that exposure in a much smaller set of mega-cap growth companies, with technology carrying far more weight.

SPY’s performance is diversified across hundreds of companies, preventing any single style from consistently dominating results. MGK is more concentrated, with fewer holdings and larger allocations to leading growth stocks. This can enhance returns when these stocks outperform, but also increases dependence on their valuations and sustained investor sentiment.

For investors, SPY is a suitable core holding if you are seeking broad U.S. market exposure without emphasizing a specific segment. MGK is appropriate for investors who wish to focus on mega-cap growth and can accept greater volatility. The decision ultimately comes down to whether you want your core equity exposure to reflect the broader market, or to hinge on continued dominance from a narrow group of high-priced growth leaders.

Eric Trie has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.