This Vanguard exchange-traded fund can help investors beat the S&P 500, but it comes with risks.The term "Magnificent Seven" was first used by Wall Street analysts in 2023 to describe a group of seven companies that operate at the cutting edge of the technology industry. They are worth a combined $19.7 trillion, but their incredible size isn't the only reason they earned the nickname. Since the artificial intelligence (AI) revolution started gathering momentum at the start of 2023, the Magnificent Seven sto ...

Core Insights - The S&P 500 is a leading U.S. stock market index comprising 500 companies from 11 sectors, selected based on strict criteria to ensure high quality [1] - The S&P 500 has delivered a compound annual return of 10.5% since its inception in 1957, making it a recommended investment by experts like Warren Buffett [2] Investment Options - Younger investors or those with a higher risk appetite may consider alternative investments with greater growth potential [3] - The Vanguard Growth ETF aims to track the CRSP US Large Cap Growth Index, which includes companies representing 85% of the market capitalization of the CRSP US Total Market Index [5][6] - The Vanguard Growth ETF holds 165 stocks, with its top five holdings (Microsoft, Nvidia, Apple, Amazon, Meta Platforms) accounting for 44.2% of its portfolio [8] - Over the last decade, the Vanguard Growth ETF generated a compound annual return of 16.2%, outperforming the S&P 500's 12.8% [10] - Since its establishment in 2004, the Vanguard Growth ETF has achieved a compound annual return of 11.8%, compared to the S&P 500's 10.1% [11] Vanguard Mega Cap Growth ETF - The Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index, focusing on companies that make up 70% of the market cap of the CRSP US Total Market Index [13][14] - This ETF holds 69 stocks, with its top five holdings representing 50.3% of its portfolio [14] - The Vanguard Mega Cap Growth ETF has delivered a compound annual return of 13.4% since its inception in 2007, surpassing the S&P 500's 10.2% [15] Sector Concentration - The technology sector constitutes 60.4% of the Vanguard Growth ETF and 63.9% of the Vanguard Mega Cap Growth ETF [17] - High concentration in technology stocks has led to significant returns but also exposes investors to risks if these stocks experience corrections [17][18]