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Should Vanguard Mega Cap Growth ETF (MGK) Be on Your Investing Radar?
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Launched on 12/17/2007, the Vanguard Mega Cap Growth ETF (MGK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $10.51 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.56%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Apple Inc. (AAPL - Free Report) accounts for about 15.17% of total assets, followed by Microsoft Corp. (MSFT - Free Report) and Amazon.com Inc. (AMZN - Free Report) .
The top 10 holdings account for about 35.36% of total assets under management.
Performance and Risk
MGK seeks to match the performance of the CRSP U.S. Mega Cap Growth Index before fees and expenses. The CRSP US Mega Cap Growth Index is a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of mega-capitalization growth stocks in the United States.
The ETF has lost about -28.54% so far this year and is down about -11.70% in the last one year (as of 05/12/2022). In the past 52-week period, it has traded between $188.03 and $264.33.
The ETF has a beta of 1.09 and standard deviation of 26.90% for the trailing three-year period, making it a medium risk choice in the space. With about 109 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mega Cap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MGK is an outstanding option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $66.58 billion in assets, Invesco QQQ has $159.14 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should Vanguard Mega Cap Growth ETF (MGK) Be on Your Investing Radar?
Launched on 12/17/2007, the Vanguard Mega Cap Growth ETF (MGK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $10.51 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.56%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Apple Inc. (AAPL - Free Report) accounts for about 15.17% of total assets, followed by Microsoft Corp. (MSFT - Free Report) and Amazon.com Inc. (AMZN - Free Report) .
The top 10 holdings account for about 35.36% of total assets under management.
Performance and Risk
MGK seeks to match the performance of the CRSP U.S. Mega Cap Growth Index before fees and expenses. The CRSP US Mega Cap Growth Index is a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of mega-capitalization growth stocks in the United States.
The ETF has lost about -28.54% so far this year and is down about -11.70% in the last one year (as of 05/12/2022). In the past 52-week period, it has traded between $188.03 and $264.33.
The ETF has a beta of 1.09 and standard deviation of 26.90% for the trailing three-year period, making it a medium risk choice in the space. With about 109 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mega Cap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MGK is an outstanding option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $66.58 billion in assets, Invesco QQQ has $159.14 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.