If you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Vanguard Mega Cap ETF (
MGC Quick Quote MGC - Free Report) , a passively managed exchange traded fund launched on 12/17/2007.
The fund is sponsored by Vanguard. It has amassed assets over $3.62 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 1.55%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 29.30% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Apple Inc. (
AAPL Quick Quote AAPL - Free Report) accounts for about 8.48% of total assets, followed by Microsoft Corp. ( MSFT Quick Quote MSFT - Free Report) and Amazon.com Inc. ( AMZN Quick Quote AMZN - Free Report) .
The top 10 holdings account for about 33.08% of total assets under management.
Performance and Risk
MGC seeks to match the performance of the CRSP US Mega Cap Index before fees and expenses. The CRSP U.S. Mega Cap Index includes the largest U.S. companies, with a target of including the top 70% of investable market capitalization. The index includes securities traded on NYSE, NYSE Market, NASDAQ or ARCA.
The ETF has lost about -17.90% so far this year and is down about -16.42% in the last one year (as of 11/21/2022). In the past 52-week period, it has traded between $124.31 and $169.35.
The ETF has a beta of 1 and standard deviation of 25.25% for the trailing three-year period, making it a medium risk choice in the space. With about 239 holdings, it effectively diversifies company-specific risk.
Vanguard Mega Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, MGC is a good option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (
IVV Quick Quote IVV - Free Report) and the SPDR S&P 500 ETF ( SPY Quick Quote SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $302.21 billion in assets, SPDR S&P 500 ETF has $378.74 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%. Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.