Megacap growth stocks could continue to carry the S&P 500 to new heights over the long term.
As of market close on March 27, the S&P 500 (SNPINDEX: ^GSPC) was down 7% year to date, the Nasdaq Composite (NASDAQINDEX: ^IXIC) had fallen 9.9%, and the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK) had slipped 13.9%.
Fast-forward to market close on April 16, and the Nasdaq is now outperforming the S&P 500 -- up 3.7% YTD compared to a 2.9% gain for the S&P 500. Meanwhile, the Mega Cap Growth ETF has nearly recovered all of its 2026 sell-off and is now down just 0.7% YTD.
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The market's sudden reversal is a reminder of how emotions and uncertainty can cause multitrillion-dollar swings in the U.S. stock market. But investors looking to buy may be hesitant, given how much the market has bounced. Rest assured, there are plenty of top growth stocks that remain excellent buys now.
The Vanguard Mega Cap Growth ETF is undergoing a 5-for-1 split on April 21, which will quintuple the number of outstanding shares while reducing the share price from around $410 at the time of this writing to $82 per share post-split.
Here's why the ETF is a great buy even after largely recovering its loses form earlier in the year.
The Vanguard Mega Cap Growth ETF has crushed the S&P 500 over the last decade, with a 427% total return compared to the index's 301.2%. The outperformance stems from the ETF's concentration in a handful of companies and sectors.
| Sector | Vanguard Mega Cap Growth ETF | Vanguard S&P 500 ETF (NYSEMKT: VOO) |
|---|---|---|
| Technology/Communications | 68.1% | 43.2% |
| Consumer Discretionary | 15.8% | 9.9% |
| Industrials | 6.6% | 9% |
| Healthcare | 5.5% | 9.5% |
| Real Estate | 1.8% | 1.9% |
| Financials | 1.2% | 12.6% |
| Consumer Staples | 0.5% | 5.3% |
| Basic Materials | 0.5% | 2.1% |
| Energy | 0% | 4% |
| Utilities | 0% | 2.5% |
Data source: Vanguard.
Over half of the S&P 500 index is invested in just 25 stocks. But the Vanguard Mega Cap Growth ETF takes concentration to a whole new level. Roughly half the ETF is invested in just five stocks -- Nvidia, Alphabet, Apple, Microsoft, and Amazon. And 80.4% of the fund is invested in 20 stocks.
Many growth-focused funds are overly diversified, sector-focused, or have high fees. The Mega Cap Growth ETF is unique in that it is passively managed yet heavily concentrated in growth stocks across stock market sectors. The passive management structure allows Vanguard to charge a dirt cheap 0.05% expense ratio. So investors can rest easy knowing they aren't racking up high fees.