An Overview of MGK vs VUG
|Vanguard Mega Cap Growth ETF|
|Vanguard Growth ETF|
|Benchmark Index||CRSP US Mega Cap Growth Index||CRSP US Large Cap Growth Index|
|Fund Type||Passive ETF||Passive ETF|
|Number of Stocks||100||257|
|% of 10 largest holdings||57.2%||46.80%|
|AUM||$10.0 billion||$145.7 billion|
Vanguard funds are known for their low cost ETF. MGK has expense ratio of 0.07% vs VUG’s 0.04%. For every $10,000 you invest, you are only paying $7 and $4 respectively each year in management expenses.
Both these ETFs has similar Dividend Yield. MGK’s 0.57% yield is slightly lower than VUG’s 0.59%. These low yield expected because growth companies usually retain their a large portion of their earnings for company growth and expansion, instead of distributing it to shareholder as dividend.
Another difference we see is the size of the AUM. MGK has a smaller AUM with $10B compared to VUG’s $145.7B. That is like 10x bigger.
Main Difference between MGK vs VUG
|Median Market Cap|
MGK tracks the CRSP US Mega Cap Growth Index. Only growth companies that are of Mega Market Cap are included. This is why we see lesser number of stocks compared to VUG.
VUG on the other hand, tracks the CRSP US Large Cap Growth Index. This means that any growth companies that are Large Market Cap and above will be included, thus the larger number of stocks we see in VUG
Top 10 Holdings
|Vanguard Mega Cap Growth ETF|
|Vanguard Growth ETF |
|Apple Inc. |
|Microsoft Corp. |
|Amazon.com Inc. |
|Alphabet Inc. |
|Facebook Inc. |
|Tesla Inc. |
|Visa Inc. |
|Mastercard Inc. |
|NVIDIA Corp. |
|Home Depot Inc.|
|Home Depot Inc. |
|57.20% of total net asset||46.80% of total net asset|
Top 10 holdings on both ETFs are the same. It is of no surprise. Because these index are Market Cap Weighted. So obviously, the top 10 Market Caps for both will make up the top 10 holdings.
The slight difference is that the top 10 in MGK makes up 57.20% of total net asset compared to 46.80% of total net asset for VUG.
Nevertheless, these are still very high concentration of stocks from the top 10 holdings.
MGK vs VUG – Performance
Using the Portfolio Visualizer to back test these 2 ETFs, we can then compare the portfolio growth between Jan 2008 – Dec 2020. The time period was constrained by the available data for MGK (Vanguard Mega Cap Growth ETF).
This is what you will end up with at the end of Dec 2020 if you have invest $10,000 in 2008.
MGK (Vanguard Mega Growth ETF): $48,250
VUG (Vanguard Growth ETF): $46,180
This works out to be 4.4% more returns if you have invested in MGK.
2008 and 2018 are the only years that both these ETFs return losses. MGK incur losses of -36.25% vs VUG’s -38.02% in 2008, and -2.90% vs -3.31% in 2018.
MGK does slightly better in downturn. But during a mega crisis like the one in 2008, one can expect more than 30% losses for both ETFs in a year.
|1 Year||5 Year||10 Year|
The annualized returns we see for both these funds are very similar, with a difference of approx. 1% difference.
Conclusion – Which Vanguard Growth ETF Should You Choose?
As we can see from the performance chart and the annualized returns table, these 2 ETFs have very similar characteristics and returns. MGK did perform slightly better than VUG based on the past data.
Personally, I am invested in VUG, because it is more diversified with more stocks in the ETF, and it has a larger AUM. Which means it may have more volume than MGK.
So if you want a more diversified portfolio, maybe you can consider VUG. But other than that, they are really similar in terms of returns and drawdowns.
As always remember that Past Performance is No Guarantee of Future Results.