The Vanguard Mega Cap Growth ETF (MGK 0.50%) and the Vanguard S&P 500 ETF (VOO 0.49%) differ most in cost, yield, and diversification, with VOO offering broader exposure and MGK focusing on growth leaders.

The Vanguard Mega Cap Growth ETF targets the largest U.S. growth stocks, while the Vanguard S&P 500 ETF tracks the broad market for market-wide representation and stability. This comparison highlights their key differences in cost, performance, and portfolio makeup.

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.

VOO is more affordable than MGK, charging just 0.03% in annual expenses compared to MGK’s 0.07%. VOO also offers a higher yield, with a 1.1% dividend payout versus MGK’s 0.4%.

Performance & risk comparison

What's inside

VOO tracks the S&P 500 Index and holds 505 stocks across all major sectors, with technology (36%), financial services (13%), and consumer cyclicals (11%) leading the mix. Its largest positions are NVIDIA (NVDA +1.12%), Apple (AAPL 0.87%), and Microsoft (MSFT +1.36%). The fund has a track record of over 15 years, offering broad exposure to the largest U.S. companies.

MGK is heavily tilted toward technology (71%) and holds just 69 stocks, making it far more concentrated. Its top holdings—NVIDIA, Apple, and Microsoft—command even higher portfolio weights. This focus may amplify returns during tech rallies but can also increase volatility compared to VOO’s diversified approach.

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Foolish take

Investors interested in the Vanguard Mega Cap Growth ETF should be extra comfortable with big tech stocks with a large stake in the artificial intelligence revolution. Nvidia is its largest holding at 14.3% of the fund. Microsoft, and Alphabet (GOOG 2.61%)(GOOGL 2.57%), the company behind Google, make up 11.7%, and 8.7% of the fund, respectively.

Folks investing their savings into the Vanguard S&P 500 ETF have a lot riding on Nvidia, Alphabet, Apple, and Microsoft. These four tech giants make up about 27% of the fund.

Investors seeking a steady source of dividend income have done much better with the Vanguard 500 Index Fund ETF. Its latest quarterly payout was 25.8% higher than the quarterly payout it delivered five years earlier, and it's risen relatively steadily. Dividends from the Vanguard Mega Cap Growth ETF are much more volatile and the latest payment was about 4% lower than the payment its investors received 10 years earlier.

Glossary

ETF: Exchange-Traded Fund; a fund that trades on stock exchanges and holds a basket of assets.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Dividend yield: Annual dividends paid by a fund divided by its share price, expressed as a percentage.
Beta: A measure of an investment's volatility compared to the overall market.
AUM: Assets Under Management; the total market value of assets a fund manages.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.
Diversification: Spreading investments across various assets to reduce risk.
Mega cap: Companies with extremely large market capitalizations, typically over $200 billion.
Growth stocks: Shares of companies expected to grow earnings faster than the market average.
Concentration: When a fund invests heavily in a small number of holdings or sectors, increasing risk.
Sector: A group of companies operating in the same area of the economy, like technology or financials.