Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Vanguard Mega Cap ETF (MGC) is a passively managed exchange traded fund launched on 12/17/2007.
The fund is sponsored by Vanguard. It has amassed assets over $6.49 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 35.40% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 8.37% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).
The top 10 holdings account for about 39.22% of total assets under management.
Performance and Risk
MGC seeks to match the performance of the CRSP US Mega Cap Index before fees and expenses. The CRSP U.S. Mega Cap Index includes the largest U.S. companies, with a target of including the top 70% of investable market capitalization. The index includes securities traded on NYSE, NYSE Market, NASDAQ or ARCA.
The ETF has added roughly 27.70% so far this year and was up about 27.70% in the last one year (as of 12/31/2024). In the past 52-week period, it has traded between $166.37 and $220.18.
The ETF has a beta of 1 and standard deviation of 17.70% for the trailing three-year period, making it a medium risk choice in the space. With about 196 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mega Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MGC is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $591.66 billion in assets, SPDR S&P 500 ETF has $624.17 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Get it free >>Vanguard Mega Cap ETF (MGC): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
