Market-Wide Returns or Concentrated Growth: Where SPY and MGK Get Their Returns

Core Insights - The State Street SPDR S&P 500 ETF Trust (SPY) and Vanguard Mega Cap Growth ETF (MGK) differ significantly in sector allocation and risk profile, with MGK focusing on technology and growth while SPY provides broader diversification and a higher yield [1][2] Cost and Size Comparison - SPY has an expense ratio of 0.09% and an AUM of $708.92 billion, while MGK has a lower expense ratio of 0.07% and an AUM of $32.5 billion [3] - The 1-year return for SPY is 13.46%, compared to MGK's 10.41%, and SPY offers a dividend yield of 1.1% versus MGK's 0.4% [3][4] Performance and Risk Comparison - Over the past five years, SPY experienced a maximum drawdown of 24.49%, while MGK faced a larger drawdown of 36.01% [5] - An investment of $1,000 would have grown to $1,770 in SPY and $1,842 in MGK over the same period [5] Holdings Composition - MGK consists of 69 holdings, with 55% of its assets in technology, and top positions include NVIDIA, Apple, and Microsoft, which together account for over a third of the fund [6] - SPY holds over 500 companies, with technology making up 35% of its portfolio, allowing for broader diversification and reduced single-stock risk [7] Investment Implications - SPY and MGK are both large-cap U.S. equity ETFs designed to achieve returns through different strategies, with SPY reflecting the full S&P 500 and MGK concentrating on a smaller set of mega-cap growth companies [8]