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Is the Vanguard Mega Cap ETF the Simplest Way to Invest in the Top S&P 500 Stocks?
The Motley Fool· 2025-08-23 20:05
Core Viewpoint - The Vanguard Mega Cap ETF offers a low-cost investment option for those looking to gain exposure to large-cap stocks, potentially outperforming traditional S&P 500 ETFs due to its concentrated holdings in mega-cap companies [1][13]. Cost Comparison - The Vanguard Mega Cap ETF has an expense ratio of 0.07%, slightly higher than the 0.03% of the Vanguard S&P 500 ETF, resulting in a $4 difference for every $10,000 invested [2]. Holdings Concentration - The Vanguard Mega Cap ETF holds 185 stocks, significantly fewer than the 504 stocks in the Vanguard S&P 500 ETF, indicating a higher concentration in its top holdings [5][8]. - The top 20 holdings in the Vanguard Mega Cap ETF account for 57.2% of the fund, compared to 48.3% for the S&P 500 ETF [7]. Performance Metrics - The Mega Cap ETF has achieved a total return of 308.1% over the last decade, outperforming the S&P 500 ETF's 284.2% total return [10]. Sector Focus - The Mega Cap ETF is more growth-oriented, with significant weightings in technology and consumer discretionary sectors, where major companies like Nvidia, Microsoft, and Amazon dominate [9][10]. Investment Strategy - The Vanguard Mega Cap ETF is suitable for investors seeking low-cost, diversified exposure to the largest U.S. companies, and can be effectively paired with smaller-cap individual stocks for enhanced diversification [11][12].