The Motley Foolยท2025-04-02 11:07Core Viewpoint - Nvidia has experienced significant growth, becoming the third most valuable company globally, but is currently underperforming compared to the S&P 500 and Nasdaq Composite due to economic slowdown fears and tariffs [1] Group 1: Investment Options - Investors can either buy Nvidia stock directly or invest in ETFs that include Nvidia, such as the Vanguard Mega Cap Growth ETF and the Vanguard Information Technology ETF, both of which have low expense ratios [2] - The Vanguard Mega Cap Growth ETF targets top growth stocks across various sectors, while the Vanguard Information Technology ETF focuses solely on tech stocks, excluding companies like Amazon and Meta Platforms [4][9] Group 2: Fund Composition - Nvidia and other large companies like Apple and Microsoft dominate both ETFs, making up 46% of the Information Technology ETF and 35.9% of the Mega Cap Growth ETF [5] - The Vanguard Mega Cap Growth ETF includes a diverse range of top growth stocks from various sectors, while the Information Technology ETF has a higher concentration in semiconductor and tech-related industries [7][9] Group 3: Portfolio Considerations - Investors should assess how an ETF fits into their existing portfolio, particularly if they already hold significant amounts of stocks like Apple or Microsoft, as both ETFs are heavily concentrated in these companies [10][11] - Calculating true exposure to individual stocks within an ETF is essential for understanding portfolio concentration versus diversification [12] Group 4: Volatility and Market Conditions - Both ETFs are expected to be more volatile than the S&P 500, as evidenced by their performance during market sell-offs, with both ETFs and the Nasdaq Composite falling over 30% in 2022 compared to a 19.4% drop in the S&P 500 [13] - The primary reason to invest in either ETF is for exposure to large megacap growth stocks, as they are top-heavy and do not provide much diversification beyond their largest holdings [14]