If you like big tech, you’ll love this ETF that lets you invest in Microsoft, Nvidia, and Apple at the same time
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Any S&P 500 Magnificent Seven stocks would be a welcome addition to any investor’s portfolio. Unfortunately for most investors, Magnificent Seven’s shares are so expensive that they’re largely out of reach if you’re not already rich (or close to it). Fortunately, that’s not the case because of a unique exchange-traded fund (ETF) that lets you own shares in four Magnificent Seven stocks at the same time.
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The Vanguard Mega Cap Growth ETF has a heavy focus on big tech, which accounts for 61.4% of the 71 stocks in the ETF’s portfolio. However, 45% of the ETF’s portfolio is invested in Apple (13.36%), Amazon (6.82%), Microsoft (12.35%) and Nvidia (12.52%). Apple, Microsoft and Nvidia are all at the forefront of the AI ​​revolution, while Amazon has become a dominant force in e-commerce.
That’s impressive enough, but the Vanguard Mega Cap Growth ETF doesn’t stop there. In terms of weight allocation, every member of the S&P 500 Magnificent Seven is included in the top ten of the Vanguard Mega Cap Growth ETF. This means that you also invest in Meta and Tesla. The fund also owns shares in market share and industry powerhouses such as Eli Lilly, Visa, Costco and McDonalds.
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All of these companies offer products and services that are in high demand by large segments of the buying public. They also have a level of global recognition that is difficult to overestimate. According to Ycharts, the combined market cap of the S&P 500 Magnificent Seven is over $16 trillion. Data from Ycharts also shows that Magnificent Seven heavyweights Google, Nvidia and Microsoft are up almost 50% in 2024.
The same data also shows that Magnificent Seven shares have been responsible for 64.1% of the S&P 500’s market cap this year. So when you buy the Vanguard Mega Cap Growth ETF, you’re buying shares in multiple companies that have grown rapidly in 2024. They also appear poised for further growth in 2025 and beyond.
Trying to buy individual shares in these companies would be prohibitively expensive for all but the most successful everyday investors. However, you can buy Vanguard Mega Cap Growth ETF shares for $350.36 (according to the Vanguard website). Vanguard’s public filings also show that the Mega Cap Growth ETF is up as much as 35% in value through 2024.
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Its 10-year return (according to Vanguard) is an impressive 16.30%, meaning this ETF also has potential as a buy-and-hold investment that can grow your wealth significantly. While this ETF focuses more on growth than passive income, it currently pays a quarterly dividend of $0.374 per share. The potential of the Vanguard Mega Cap Growth ETF is easy to see when you look at the overall package.
The downside risk is that the continued performance of the Vanguard Mega Cap Growth ETF is heavily dependent on the fortunes of big tech companies. The AI ​​revolution is pushing companies like Apple, Microsoft, and Nvidia into the stratosphere in terms of value, but nothing stays up forever. That’s why, even though this ETF is highly diversified, it may not be wise to put all your eggs in this one basket.
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This article If You Love Big Tech, You’ll Love This ETF That Lets You Invest in Microsoft, Nvidia, and Apple at the Same Time originally appeared on Benzinga.com
