Investing can be tedious. That's especially the case when you want to buy multiple stocks. It's not difficult, but it can take a while. That's where exchange-traded funds (ETFs) come in handy. You can buy many stocks in one fell swoop.
With the so-called "Magnificent Seven" stocks powering the overall stock market, some investors could be interested in scooping up all of them. Want to own all seven stocks with little effort required? Buy one of these Vanguard ETFs.
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Introducing the "Magnificent Eight"
Vanguard is one of the leading fund managers in the world. It's especially known for offering low-cost funds. Eight of its ETFs currently own all of the Magnificent Seven stocks.
Let's start with the Vanguard Total Stock Market ETF (VTI 0.01%). This ETF casts the widest net, owning virtually the entire U.S. stock market. VTI's holdings include a whopping 3,731 stocks, notably including Microsoft, Apple, Nvidia, Amazon, Meta Platforms, Alphabet, and Tesla.
As its name hints, the Vanguard ESG U.S. Stock ETF (ESGV -0.08%) focuses on U.S. stocks that meet specific environmental, social, and corporate governance (ESG) criteria. All of the Magnificent Seven stocks qualify, along with 1,456 other stocks.
The smallest Magnificent Seven stock (Tesla) has a market cap of over $560 billion. The Vanguard Mega Cap ETF (MGC -0.17%) invests in stocks with market caps of $200 billion or more. The Vanguard Large-Cap ETF (VV -0.11%) owns a basket of U.S. large-cap companies. It stands to reason that both ETFs own positions in all the Magnificent Seven stocks.
Each of the Magnificent Seven stocks is a member of the S&P 500. The Vanguard S&P 500 ETF (VOO -0.02%), which attempts to track the S&P 500, has positions in all seven stocks.
Investors' interest in the Magnificent Seven is primarily due to the sizzling gains they've delivered. Nvidia's shares, for example, have skyrocketed nearly 240% over the last 12 months. The Vanguard Mega Cap Growth ETF (MGK -0.12%) focuses on mega-cap growth stocks. The Vanguard Growth ETF (VUG -0.20%) focuses on large-cap growth stocks. The Vanguard S&P 500 Growth ETF (VOOG -0.11%) focuses on S&P 500 growth stocks. Unsurprisingly, all three ETFs own all of the Magnificent Seven stocks.
How these Vanguard ETFs compare
As we've discussed, these "Magnificent Eight" Vanguard ETFs have different objectives. How do they stack up against each other in terms of annual expense ratio, risk, and performance? The following table provides a summary comparison:
| ETF | Annual Expense Ratio |
Risk Level* |
5-Year Performance | Performance Since Inception |
|---|---|---|---|---|
| Vanguard Total Stock Market ETF | 0.03% | 4 | 13.85% | 8.52% |
| Vanguard ESG U.S. Stock ETF | 0.09% | 4 | 14.96% | 12.98% |
| Vanguard Mega Cap ETF | 0.07% | 4 | 15.49% | 10.5% |
| Vanguard Large-Cap ETF | 0.04% | 4 | 14.65% | 10.01% |
| Vanguard S&P 500 ETF | 0.03% | 4 | 14.72% | 14.27% |
| Vanguard Mega Cap Growth ETF | 0.07% | 4 | 19.59% | 12.73% |
| Vanguard Growth ETF | 0.04% | 4 | 14.74% | 11.16% |
| Vanguard S&P 500 Growth ETF | 0.10% | 4 | 14.1% | 15.64% |
Data source: Vanguard. All data as of the time of writing. *Risk level as rated by Vanguard from 1 (lowest risk) to 5 (highest risk).
The eight Vanguard ETFs match up quite closely. None of them has an especially high annual expense ratio. They have the same level of risk (as determined by Vanguard). All have also delivered double-digit percentage returns over the last five years.
The performance since inception is the main differentiator, with the Vanguard S&P 500 Growth ETF handily outperforming the rest while the Vanguard Total Stock Market ETF delivered much lower returns than the others. It's important to keep in mind, though, that these ETFs began trading at different times. This could skew the performance since the inception of each fund relative to others. Additionally, the standard disclaimer applies to each ETF: Past performance is not necessarily indicative of future results.
Which is the best?
Beauty is in the eye of the beholder. Similarly, the best "Magnificent Eight" Vanguard ETF to buy depends on the individual investor.
If you want more diversification, the Vanguard Total Stock Market ETF will probably appeal the most to you. On the other hand, if you want the Magnificent Seven stocks to have a greater weight, the Vanguard Mega Cap Growth ETF is probably the most up your alley. Microsoft, Apple, Amazon, Nvidia, Meta, Alphabet, and Tesla collectively make up 57% of the ETF's total portfolio.