Meet the Spectacular Vanguard ETF With 44.6% of Its Portfolio Parked in Nvidia, Alphabet, Apple, and Microsoft

The Morningstar U.S. Total Market index is made up of all 3,476 companies listed on American stock exchanges. But then there is the Morningstar U.S. Mega Cap Growth index, which exclusively holds America’s 52 most valuable growth companies, and they account for almost half the value of the entire U.S. Total Market Index.

That’s right — those 52 companies are worth almost as much as the other 3,424 listed companies combined. Perhaps that isn’t a surprise given the four largest members in the Mega Cap Growth index are Nvidia (NVDA -4.22%), Alphabet (GOOGL -1.40%)(GOOG -1.45%), Apple (AAPL -1.23%), and Microsoft (MSFT -1.55%), which have a combined market capitalization of $17.6 trillion.

The Vanguard Morningstar Mega Cap Growth ETF (MGK -3.10%) is an exchange-traded fund (ETF) that mimics the Large Cap Growth index by holding the same stocks. Here’s how adding it to a diversified portfolio can supercharge an investor’s long-term returns.

Image source: Getty Images.

A concentrated group of America’s best growth stocks

Given the substantial value of the four largest members of the Mega Cap Growth index (and by extension, the Vanguard ETF), they represent an eye-popping 44.6% of the value of its portfolio.

Stock

Vanguard ETF Portfolio Weighting

1. Nvidia

13.69%

2. Apple

12.53%

3. Microsoft

9.46%

4. Alphabet

8.93%

Data source: Vanguard. Portfolio weightings are accurate as of Sept. 30, 2026, and are subject to change.

The four companies operate very different businesses, but they are powering the artificial intelligence (AI) revolution in their own unique way.

• Nvidia supplies the world’s best graphics processing units (GPUs) for data centers, which are the main chips used in AI training and inference workloads. Its new Vera Rubin GPU systems recently started shipping, and they will significantly reduce the cost of deploying AI software, which is a key factor in driving widespread adoption of this technology.
• Apple’s latest iPhones, iPads, and Mac computers are fitted with custom chips that are designed to handle the Apple Intelligence suite of AI features and applications. More than 2.5 billion Apple devices are currently active worldwide, so this company could soon be the largest distributor of AI to consumers.
• Alphabet developed features like AI Overviews and AI Mode to bring its Google Search platform into the AI era. Google Cloud is also growing rapidly as demand soars for its data center infrastructure and its portfolio of ready-made foundation models that enterprises can use to build AI software.
• Microsoft has integrated its Copilot AI assistant into legacy software products like Windows and 365 (Word, Excel, Outlook, and more). Like Google Cloud, Microsoft’s Azure cloud platform is also experiencing incredible demand for its portfolio of AI services, and it’s consistently the fastest growing segment in the entire organization.

AI stocks are currently pulling back after posting blistering gains over the last few years. But Nvidia, Alphabet, Apple, and Microsoft are still sitting on a median return of 195% since the AI boom started gathering momentum in January 2023, when OpenAI’s ChatGPT application crossed 100 million users for the first time. Therefore, these stocks have been a major source of upside for the Vanguard ETF.

NVDA data by YCharts

This Vanguard ETF also holds a number of other AI titans including Meta Platforms, Broadcom, Amazon, Advanced Micro Devices, and Palantir Technologies. But it does offer some diversification through positions in payment giants Visa and Mastercard, industrial powerhouse Boeing, and consumer products company Monster Energy, to name just a few of its non-technology holdings.

Should investors buy the Vanguard ETF right now?

The Vanguard Morningstar Mega Cap Growth ETF has delivered a compound annual return of 13.8% since it was established in 2007, beating the S&P 500 index which gained an average of 10.9% per year over the same period. However, given its highly concentrated portfolio of just 52 stocks, investors probably shouldn’t bet the farm on this fund alone.

MGK – Vanguard Morningstar Mega Cap Growth ETF

$86.85-$2.78 (-3.10%)

NYSEMKT · As of 5:00 PM ET 10/30/26

Adding this ETF to a diversified portfolio of other funds and individual stocks might be a better strategy, because it can help minimize any potential downside risks. Technology companies are currently spending hundreds of billions of dollars on AI data center infrastructure each year, and concerns are mounting about a potential slowdown. If that happens, there could be further downside ahead for most of the stocks at the top of the Vanguard ETF.

Investors who put $20,000 into an S&P 500 index fund in 2007 would have $142,800 today. But had they split the $20,000 by placing $10,000 in the S&P 500 and the other $10,000 in the Vanguard ETF, they would have $188,000 today instead. At the same time, they would have smoothed out some of the volatility associated with having significant exposure to the tech industry.

In summary, this Vanguard ETF could be a great long-term investment, but diversification might be the key to yielding the best results.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Boeing, Broadcom, Mastercard, Meta Platforms, Microsoft, Monster Beverage, Nvidia, Pal