Small-Cap vs. Mega-Cap: Is IWO or MGK the Better Buy Right Now?

The Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) and the iShares Russell 2000 Growth ETF (NYSEMKT:IWO) some purpose to seizure U.S. maturation stocks, but they beryllium connected other ends of the size spectrum.

MGK concentrates connected the largest names successful the market, portion IWO tracks small-cap maturation companies, giving investors precise antithetic hazard and assemblage profiles to consider.

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

MGK is much affordable with a 0.05% disbursal ratio, portion IWO charges 0.24%. IWO offers a somewhat higher dividend yield, which whitethorn entreaty to those seeking humble income alongside growth.

IWO tracks small-cap U.S. stocks with maturation characteristics, holding implicit 1,000 stocks allocated to healthcare (making up 26% of assets), exertion (22%), and industrials (22%).

Its apical positions — Bloom Energy, Credo Technology Group, and Fabrinet — relationship for lone tiny slices of the portfolio, supporting wide diversification. The money has a agelong way record, with much than 25 years successful operation, and nary leverage oregon ESG quirks to note.

MGK, by contrast, is intensely concentrated successful mega-cap growth. It holds conscionable 60 stocks, with astir 55% allocated to exertion and different 17% to connection services. Its apical holdings — Nvidia, Apple, and Microsoft — collectively correspond much than one-third of assets, starring to much focused and little diversified vulnerability than IWO.

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MGK and IWO instrumentality starkly antithetic approaches, and each carries its ain acceptable of advantages and drawbacks.

MGK focuses connected mega-cap maturation names, with an incredibly constrictive portfolio of conscionable 60 U.S. stocks. That limits diversification significantly, but astatine the aforesaid time, mega-cap stocks are often manufacture leaders with agelong histories of recovering from volatility.

IWO offers acold much assortment with implicit 1,000 holdings. However, its small-cap absorption tin effect successful greater terms swings, arsenic smaller companies are often much volatile than their larger counterparts.

Between the 2 funds, IWO has experienced greater humanities volatility with a steeper max drawdown and higher beta. But it’s besides underperformed MGK implicit 5 years, apt owed successful portion to MGK’s apical holdings experiencing staggering maturation successful caller years.