Mega-Cap 8: Market Cap Retreats to $9 Trillion And the group collectively has dropped from a market cap of nearly $13 trillion around the start of the year to $9 trillion today. The “Mega-cap 8,” which is Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, NVIDIA, and Tesla, according to Ed Yardeni, dominated the fund. Energy, up 60% this year, is a measly 0.2% of the fund, according to Vanguard. What’s important to know about MGK before you go about buying the dip based on a cheap valuation is that the ETF is 53% weighted to the Information Technology sector and 25% in Consumer Discretionary. Apparently, they believe that the 20%-plus drubbing so far this year is good enough for the group to be considered a buy on valuation. Moreover, the Chicago-based firm showcases that large-cap growth trades at a 19% discount to its fair value, among the cheaper styles right now. Speaking of Morningstar, the equity research company recently came out somewhat in favor of broad U.S. Large-Cap Growth Among the Worst Factors YTD As illustrated below, large-cap growth, similar to MGK, is one of the relative losers on the famed Morningstar Style Box. In 2022, the mega-cap growth style has been a rough spot versus other factors.
That means you are really placing your bets on a select group of high P/E stocks by owning MGK versus a broad global equity fund. In fact, the top 10 holdings account for a whopping 61.2% of the ETF. Holding just 108 securities, MGK is concentrated in a handful of companies. 2022 ETF Performance Heat Map: MGK Down 24% The fund is a solid choice for long-term investors seeking to own only the very biggest domestic growth stocks. At just seven basis points, its expense ratio is paltry, and shares trade with a tight bid/ask spread. MGK tracks the performance of the CRSP US Mega Cap Growth Index, according to Vanguard Group. The Vanguard Mega Cap Growth ETF ( NYSEARCA: MGK) is down 24% through June 3, sharply underperforming the total U.S. Mega-cap growth stocks have taken a beating so far in 2022. Jonathan Kitchen/DigitalVision via Getty Images
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