1 Unstoppable Vanguard ETF to Buy During the S&P 500 Bull Market

There’s nothing wrong with basic, set-it-and-forget-it approaches in investing. Since the birth of the current bull market on Oct. 12, 2022, the Vanguard S&P 500 ETF (VOO +1.20%), about as basic as it gets with exchange-traded funds (ETFs), returned 96.8% through Oct. 23. That’s nothing to scoff at.

On the other hand, it’s human nature to want to tinker or, at the very least, be inquisitive about what stocks have been or are exhibiting leadership. Investors who have gone down that road of curiosity in the large-cap realm know the answer largely boils down to the “Magnificent Seven.” Consider the following: In 2023, those seven stocks accounted for 63% of VOO’s upside. That figure declined to a still high 53.7% last year.

In other words, if the market continues grinding higher, it’s likely to do so with contributions, if not heavy lifting, courtesy of the “Magnificent Seven,” and that makes the Vanguard Mega Cap Growth ETF (MGK +1.85%) a winning bull market idea.

Mega Cap Growth ETF merits consideration

Due to the soaring popularity of the Magnificent Seven, some ETF issuers introduced products entirely or closely dedicated to that famous band of stocks. Those ETFs are narrower versions of this Vanguard ETF — a fund that’s been deploying the mega-cap growth playbook for nearly 18 years.

All seven of those stocks are top 10 holdings in the Vanguard ETF, as is Magnificent Seven-adjacent Broadcom. The top three holdings of Nvidia, Microsoft, and Apple, certainly a famous trio, combine for 38% of the Mega Cap Growth ETF’s roster. So, it can be said that this is a Magnificent Seven ETF in disguise.

At a minimum, it’s a quasi-tech fund as that sector (including communication services) commanded 68.40% of the portfolio at the end of the third quarter. Translation: Vanguard’s Mega Cap Growth ETF puts investors squarely on the sides of the stocks and sectors that are carrying this bull market.

Yes, sector leadership can change and growth can fall out of favor for value, but this bull market has shown little evidence of either growth or tech shedding its status as investment royalty. Until that happens, this Vanguard fund is a bull market leader among ETFs.

Vanguard Mega Cap Growth ETF is elegant in its approach

Beyond its epic exposure to ballyhooed growth stocks, this ETF can be a portfolio supercharger for other reasons, including its simple approach. It holds 66 stocks that qualify as mega-caps and weights those holdings by market cap. Nothing fancy, but it is an approach that taps into the market’s collective wisdom.

Second, the Mega Cap Growth ETF’s cost of admission is low, making it a compelling consideration for investors who want to buy and hold a basket of growth stars. The ETF charges 0.07% annually, or just $7 on a $10,000 investment. Bottom line: Vanguard’s Mega Cap Growth ETF is a cheap but effective way to capitalize on what will hopefully be a healthy, lengthy bull market.