VOO vs. MGK: Is S&P 500 Diversification or Mega-Cap Growth the Better Buy for Investors?

Core Insights - The Vanguard Mega Cap Growth ETF (MGK) focuses on high-growth mega-cap stocks, while the Vanguard S&P 500 ETF (VOO) mirrors the full S&P 500, leading to different risk and return profiles for investors [1][2] Cost and Size Comparison - MGK has an expense ratio of 0.07% and AUM of $32.7 billion, while VOO has a lower expense ratio of 0.03% and significantly larger AUM of $1.5 trillion [3] - The one-year return for MGK is 14.12%, compared to 11.98% for VOO, but VOO offers a higher dividend yield of 1.12% versus MGK's 0.37% [3] Performance and Risk Comparison - Over the last five years, MGK experienced a max drawdown of -36.02%, while VOO had a max drawdown of -24.53% [4] - A $1,000 investment in MGK would have grown to $2,017, while the same investment in VOO would have grown to $1,819 [4] Portfolio Composition - VOO holds 505 stocks with a sector allocation of 37% in technology, 13% in financial services, and 11% in consumer cyclicals, providing broad market exposure [5] - MGK is more concentrated with only 66 holdings, heavily tilted towards technology at 58%, followed by communication services at 15% and consumer cyclical at 12% [6] Implications for Investors - VOO offers greater diversification and stability, making it suitable for risk-averse investors, while MGK's concentrated growth strategy may appeal to those willing to accept higher volatility for potentially higher returns [7][9] - The top three holdings in both funds are the same, but they constitute 38% of MGK's portfolio compared to 22% in VOO, indicating a higher risk-reward profile for MGK [8]