The "Magnificent Seven" is a powerhouse group of leading mega-cap growth-oriented companies developed by Bank of America analyst Michael Hartnett. They include Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, and Tesla.
The "Ten Titans" expands on that list by adding three influential companies -- Broadcom, Oracle, and Netflix. Over half of the Vanguard S&P 500 Growth ETF (VOOG 1.66%) is invested in the Magnificent Seven, plus these three names.
Up 13.9% year to date -- outpacing the S&P 500's 9.7% gain -- here's why this exchange-traded fund (ETF) is a great choice for investors looking to build a portfolio around the Ten Titans.
Image source: Getty Images.
Amplifying your exposure to the Ten Titans
Investment management firm Vanguard offers several low-cost ETFs. The Vanguard S&P 500 ETF (VOO 1.57%) has just a 0.03% expense ratio and offers a good starting point as it mirrors the performance of the index. Investors with a growth bent may prefer the Vanguard Growth ETF (VUG 1.69%) -- which filters out many value stocks and assigns extra weighting to growth stocks. The Vanguard Value ETF (VTV 1.35%) takes the opposite approach. Both of those ETFs charge just slightly higher expense ratios than the S&P 500 ETF at 0.04%
With a higher, but still low, expense ratio of 0.07% or just 70 cents for every $1,000 invested, the Vanguard S&P 500 Growth ETF is similar to the Vanguard Growth ETF in that it doubles down on top growth stocks in the S&P 500. But a major difference is the weight it assigns to different holdings.
|
Company |
Market Cap |
Vanguard S&P 500 ETF |
Vanguard Growth ETF |
Vanguard S&P 500 Growth ETF |
|---|---|---|---|---|
|
Nvidia |
$4.44 trillion |
8.06% |
12.64% |
14.89% |
|
Microsoft |
$3.84 trillion |
7.37% |
12.18% |
7.08% |
|
Apple |
$3.43 trillion |
5.76% |
9.48% |
4.9% |
|
Amazon |
$2.468 trillion |
4.11% |
6.72% |
4.4% |
|
Alphabet |
$2.29 trillion |
3.76% |
6.01% |
6.94% |
|
Meta Platforms |
$1.664 trillion |
3.12% |
4.62% |
5.77% |
|
Broadcom |
$1.436 trillion |
2.57% |
4.39% |
4.74% |
|
Tesla |
$1.08 trillion |
1.61% |
2.69% |
2.97% |
|
Oracle |
$699.53 billion |
0.77% |
0% |
1.42% |
|
Netflix |
$528.89 billion |
0.92% |
1.57% |
1.69% |
|
Total |
$22.89 trillion |
38.05% |
60.3% |
54.8% |
Data sources: YCharts, Vanguard.
As you can see in the table, the Vanguard Growth ETF doesn't include Oracle. Oracle is still in the Vanguard Value ETF because it used to be seen as a value stock before it transformed its business by launching a flexible approach to cloud computing and combining that offering with its leadership in database services. But besides Oracle, the Vanguard Growth ETF has a higher weighting in the rest of the "Ten Titans" than the Vanguard S&P 500 ETF.
The Vanguard S&P 500 Growth ETF is totally different. It has less Apple, slightly less Microsoft, and barely more Amazon than the S&P 500 ETF. But it has even more Nvidia, Alphabet, Meta Platforms, Broadcom, Tesla, and Netflix than the Growth ETF. Overall, the Vanguard S&P 500 Growth ETF has less exposure to the "Ten Titans" than the Vanguard Growth ETF, even when factoring in Oracle.
Loading up on the best of the Ten Titans
The best reason to go with the S&P 500 Growth ETF over the Growth ETF or S&P 500 ETF is if you want outsized exposure to Nvidia, Alphabet, Meta Platforms, Broadcom, Tesla, and Netflix, and want to limit the concentration in Apple.
Apple has been a massive winner for long-term investors. And its latest quarter showed a return to moderate growth in product sales, which was good to see because Apple had been relying heavily on services and stock buybacks to fuel its earnings-per-share growth. However, Apple doesn't have nearly the growth rate of higher octane "Ten Titans" like Nvidia or Broadcom. By contrast, Alphabet has a dirt-cheap valuation to account for its more moderate growth rate.
Similarly, Amazon's latest quarter wasn't very good as its cloud growth failed to impress relative to Alphabet or Microsoft. So, in terms of valuation, Apple and Amazon, with 31.3 and 35.1 forward price-to-earnings ratios, seem on the expensive side compared to some of their mega-cap peers. Apple could grow into its valuation if it is able to efficiently integrate and monetize artificial intelligence across its suite of devices. It's best not to value Amazon on its near-term results because the company consistently reinvests excess profits back into its business -- which can impact its earnings.
Still, if I had to pick, Apple and Amazon wouldn't make my list of favorite Ten Titans stocks. So, for that reason, the Vanguard S&P 500 Growth ETF's outsized exposure to what I would consider to be the best of the best in terms of growth prospects in Nvidia, Broadcom, and Oracle, as well as its heightened exposure to some of the more value-oriented Ten Titans in Alphabet and Meta Platforms, is definitely appealing.
Selecting the ETF that's best for you
While there are plenty of similarities across low-cost growth-focused ETFs, there are nuances worth paying attention to for investors who prefer certain Ten Titans over others. It's a great feeling to find an ETF that works especially well for your portfolio and investment objectives.
The S&P 500 Growth ETF is a good pick for folks who want exposure to all of the Ten Titans with less emphasis on Apple and Amazon. The Vanguard Growth ETF is better for maximum overall weighting in the Ten Titans as a group.
