MGK vs. SPY: Is Mega-Cap Growth or S&P 500 Diversification the Better Buy Right Now?

The Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) and the State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) some supply vulnerability to galore of the market’s biggest names.

SPY tracks the S&P 500 Index for wide U.S. large-cap coverage, portion MGK targets U.S. mega-cap maturation companies, resulting successful antithetic assemblage tilts, humanities risk, and output profiles for investors seeking maturation versus stability.

Beta measures terms volatility comparative to the S&P 500. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

MGK is somewhat much affordable than SPY with a little disbursal ratio. However, SPY besides offers a substantially higher dividend yield, which whitethorn entreaty to investors seeking passive dividend income from an ETF.

MGK has delivered marginally stronger maturation implicit 5 years. However, its overmuch deeper max drawdown highlights its greater volatility and drawdown hazard comparative to SPY.

MGK focuses connected U.S. mega-cap maturation stocks, with exertion making up 55% of the portfolio, followed by connection services astatine 17% and user cyclical astatine 13%. The money holds 60 stocks, with Nvidia, Apple, and Microsoft as its largest positions.

SPY, successful contrast, tracks the S&P 500, providing broader diversification. Around 35% of the portfolio is allocated to tech, with fiscal services making up 13% and connection services astatine 11%. Its apical positions lucifer MGK’s, but with little idiosyncratic weightings.

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SPY and MGK tin some beryllium fantastic investments depending connected what you’re looking to execute with an ETF.

As an S&P 500 ETF, SPY offers greater diversification and stability. It includes conscionable implicit 500 large-cap stocks crossed each sectors of the market, and portion it is reasonably heavy weighted toward tech, it besides includes plentifulness of established stocks that tin assistance trim the interaction of volatility.

MGK, connected the different hand, is overmuch narrower successful focus, holding conscionable a fraction of SPY’s stocks. However, that targeted attack tin assistance it gain higher returns implicit time, arsenic it’s little apt that lower-performing stocks volition dilute the fund’s full returns.

Growth ETFs person greater earning imaginable than well-diversified broad-market funds, but they tin besides acquisition greater terms swings — arsenic seen with MGK’s deeper max drawdown and higher beta.