The Vanguard Mega Cap Growth ETF (MGK +0.60%) and the Schwab U.S. Large-Cap Growth ETF (SCHG +0.52%) both offer convenient, low-cost exposure to U.S. large-cap growth stocks, but their approaches differ: MGK is more concentrated in a handful of mega-cap names, while SCHG spreads its bets more widely.

This comparison looks at their costs, returns, risk, and portfolio construction to help investors decide which growth ETF may appeal more.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

SCHG is slightly more affordable with a lower expense ratio, offering an edge for fee-conscious investors. With nearly identical dividend yields, investors seeking to increase their income will receive roughly the same payouts from both ETFs.

Performance & risk comparison

What’s inside

SCHG seeks to track the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, holding 198 large-cap stocks. Technology dominates, making up roughly 45% of total assets, followed by communication services and consumer cyclicals. Its top positions are Nvidia, Apple, and Microsoft, together accounting for close to 30% of the overall portfolio.

MGK is more concentrated, holding just 66 stocks with nearly 56% of assets allocated to the technology sector. Its top three holdings match SCHG’s, but combined, they make up nearly 37% of assets. This focus can magnify gains from its biggest names, but it may also increase exposure to single-stock swings.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

SCHG and MGK are both tech-focused growth funds with an emphasis on large companies. Between the two of them, though, MGK is much more targeted and less diversified.

Limited diversification can be both a risk and an advantage at the same time. With only one-third of the number of stocks as SCHG, MGK is more susceptible to market volatility. However, with fewer holdings, there’s also less chance that MGK will be bogged down by lower-performing stocks.

MGK has a slightly higher beta and a steeper max drawdown, signifying greater price fluctuations over the past five years. However, it has also outperformed SCHG over the last 12 months, albeit marginally.

Investors seeking broader access to large-cap stocks may prefer SCHG’s more diversified approach. This ETF is also less focused on tech compared to MGK, which can also help reduce short-term volatility.

On the other hand, if you’re looking for a fund that specifically targets the largest of large companies, MGK’s mega-cap focus could be a better fit. This ETF has experienced slightly more turbulence in recent years, but with a greater emphasis on the biggest names in tech, it may also have more room for growth if those companies continue to soar.

Glossary

ETF (Exchange-traded fund): A fund holding a basket of securities, traded on an exchange like a stock.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund’s average assets.
Dividend yield: Annual dividends paid by a fund or stock divided by its current share price.
Beta: A measure of an investment’s volatility compared with the overall market, often the S&P 500.
AUM (Assets under management): The total market value of all assets a fund or manager oversees.
Max drawdown: The largest peak-to-trough decline in an investment’s value over a specified period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Large-cap: Companies with relatively large market values, typically tens or hundreds of billions of dollars.
Growth stocks: Companies expected to grow earnings or revenue faster than the overall market.
Portfolio concentration: When a fund invests heavily in a relatively small number of holdings or sectors.
Single-stock risk: The risk that poor performance of one company significantly hurts a portfolio’s returns.
Index-tracking fund: A fund designed to replicate the performance of a specific market index.