Better ETF: Vanguard's Mega-Cap MGK vs. iShares' Small-Cap IWM

1 week ago 18

Robert Izquierdo, The Motley Fool

Sun, January 25, 2026 astatine 9:00 AM CST 4 min read

IWM holds astir 2,000 small-cap stocks with a higher yield, but costs much than MGK.
MGK focuses connected mega-cap tech maturation with a heavier assemblage tilt and deeper five-year growth, portion IWM spreads crossed healthcare, financials, and tech.
IWM trades with precocious liquidity and a somewhat little five-year max drawdown.
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The Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) and iShares Russell 2000 ETF (NYSEMKT:IWM) disagree sharply successful some outgo and portfolio focus, with MGK offering little expenses and tech concentration, portion IWM provides broader small-cap vulnerability and a higher yield.

Both funds are index-based, but MGK targets the largest U.S. maturation stocks, whereas IWM tracks the small-cap Russell 2000 universe. This examination looks astatine cost, performance, risk, and portfolio constitution to assistance investors measurement which attack whitethorn entreaty to antithetic goals.

Metric

MGK

IWM

Issuer	Vanguard	IShares
Expense ratio	0.07%	0.19%
1-yr instrumentality (as of 2026-01-22)	14.4%	18.2%
Dividend yield	0.4%	1.0%
Beta	1.20	1.34
AUM	$32.5 billion	$73.7 billion

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year play returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

IWM carries a higher disbursal ratio than MGK, making MGK the much affordable prime connected fees, portion IWM offers a higher dividend output that whitethorn entreaty to income-seeking investors.

Metric

MGK

IWM

Max drawdown (5 y)	-36.01%	-31.91%
Growth of $1,000 implicit 5 years	$1,929	$1,256

IWM holds 1,951 stocks, offering wide vulnerability to U.S. small-caps with assemblage weights led by healthcare (19%), fiscal services (16%), and exertion (16%). Its largest positions, specified arsenic Bloom Energy Class A Corp. (NYSE:BE), Credo Technology Group(NASDAQ:CRDO), and Kratos Defense and Security (NASDAQ:KTOS), each relationship for little than 1.1% of assets, keeping single-company hazard low. With a money property of 25.7 years, IWM provides long-standing entree to the small-cap segment.

MGK, by contrast, is highly concentrated successful exertion (70%), with apical holdings similar NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) making up implicit a 3rd of assets. While MGK holds 69 stocks, it focuses connected the largest U.S. maturation names, resulting successful greater vulnerability to tech assemblage trends and mega-cap institution performance.

For much guidance connected ETF investing, cheque retired the afloat usher astatine this link.

Choosing betwixt the Vanguard Mega Cap Growth ETF (MGK) and iShares Russell 2000 ETF (IWM) is astir deciding connected the benignant of vulnerability to the banal marketplace you want.