MGK vs. SPY: Is Mega-Cap Growth or S&P 500 Diversification the Better Buy Right Now?
Key Points
MGK emphasizes large-cap growth stocks and holds a heavier tech weighting than SPY.
SPY delivers broader sector diversification and a higher dividend yield.
MGK has outperformed SPY over the past five years but has also experienced a much steeper maximum drawdown.
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The Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) and the State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) both provide exposure to many of the market’s biggest names.
SPY tracks the S&P 500 Index for broad U.S. large-cap coverage, while MGK targets U.S. mega-cap growth companies, resulting in different sector tilts, historical risk, and yield profiles for investors seeking growth versus stability.
Snapshot (cost & size)
| Metric | SPY | MGK |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.09% | 0.07% |
| 1-yr return (as of Feb. 3, 2026) | 14.38% | 14.27% |
| Dividend yield | 1.07% | 0.35% |
| AUM | $712 billion | $32 billion |
| Beta (5Y monthly) | 1.00 | 1.20 |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
MGK is slightly more affordable than SPY with a lower expense ratio. However, SPY also offers a substantially higher dividend yield, which may appeal to investors seeking passive dividend income from an ETF.
Performance & risk comparison
| Metric | SPY | MGK |
|---|---|---|
| Max drawdown (5 y) | -24.50% | -36.02% |
| Growth of $1,000 over 5 years | $1,805 | $1,892 |
MGK has delivered marginally stronger growth over five years. However, its much deeper max drawdown highlights its greater volatility and drawdown risk relative to SPY.
What's inside
MGK focuses on U.S. mega-cap growth stocks, with technology making up 55% of the portfolio, followed by communication services at 17% and consumer cyclical at 13%. The fund holds 60 stocks, with Nvidia, Apple, and Microsoft as its largest positions.
SPY, in contrast, tracks the S&P 500, providing broader diversification. Around 35% of the portfolio is allocated to tech, with financial services making up 13% and communication services at 11%. Its top positions match MGK’s, but with lower individual weightings.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
SPY and MGK can both be fantastic investments depending on what you’re looking to achieve with an ETF.
As an S&P 500 ETF, SPY offers greater diversification and stability. It includes just over 500 large-cap stocks across all sectors of the market, and while it is fairly heavily weighted toward tech, it also includes plenty of established stocks that can help reduce the impact of volatility.
MGK, on the other hand, is much narrower in focus, holding just a fraction of SPY’s stocks. However, that targeted approach can help it earn higher returns over time, as it’s less likely that lower-performing stocks will dilute the fund’s total returns.
Growth ETFs have greater earning potential than well-diversified broad-market funds, but they can also experience greater price swings — as seen with MGK’s deeper max drawdown and higher beta.
If you’re willing to tolerate more volatility for the chance at potentially lucrative earnings, MGK could be a good fit for your portfolio. But if you’re seeking diversified stability, SPY could be a better choice.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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