Investors looking for exposure to U.S. growth stocks often narrow their choices to exchange-traded funds dominated by technology leaders.
Two of the most closely watched options are QQQ and MGK, both designed to capture the upside of large-cap growth companies.
While their long-term performance has been remarkably similar, differences in cost, diversification, and risk profile can influence which fund better fits an investor’s objectives.
MGK is issued by Vanguard and tracks the CRSP U.S. Mega Cap Growth Index. Its mandate is straightforward: concentrate on the very largest growth companies in the U.S. equity market.
QQQ, managed by Invesco, follows the NASDAQ-100, an index of the largest non-financial companies listed on Nasdaq. This structural distinction sets the tone for how each fund behaves.
Costs, size, and headline metrics
From a cost perspective, MGK holds a clear advantage. Its expense ratio of 0.07% is significantly lower than QQQ’s 0.20%, making it appealing to fee-conscious investors who plan to hold for the long term. Over time, even small differences in fees can compound into meaningful gaps in net returns.
In terms of scale and liquidity, QQQ dominates. With assets under management of roughly $403 billion, it is one of the most heavily traded ETFs in the world.
MGK, while still sizable at about $32.7 billion, cannot match QQQ’s depth of liquidity, a factor that matters most to active traders and large institutional investors.
Performance over the trailing 12 months has been nearly identical, with both funds posting returns just under 16%.
Dividend yield slightly favors QQQ at 0.46% versus MGK’s 0.37%, offering a modest income edge in an otherwise growth-oriented space.
Risk and drawdowns
Risk metrics show subtle but important differences. MGK’s five-year beta of 1.24 indicates higher volatility relative to the broader market, compared with QQQ’s beta of 1.19.
That gap is also reflected in historical drawdowns.
Over the past five years, MGK experienced a maximum drawdown of about 36%, marginally worse than QQQ’s roughly 35% decline.
These differences are not dramatic, but they reinforce the idea that MGK’s tighter focus on mega-cap stocks can amplify both gains and losses.
Over five years, a hypothetical $1,000 investment would have grown to approximately $2,083 in MGK, slightly ahead of the $2,033 outcome in QQQ.
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Portfolio construction and concentration
The most meaningful contrast between the two ETFs lies in their internal makeup. QQQ holds 101 stocks, with around 54% of assets allocated to the technology sector.
Communication services and consumer cyclical companies make up its next-largest exposures.
Its top holdings include Nvidia, Apple, and Microsoft, each accounting for high single-digit percentages of the portfolio.
MGK is more concentrated by design. It owns just 66 stocks and allocates about 58% of assets to technology. Its top three holdings are the same as QQQ’s, but at much heavier weights.
Together, those positions represent more than 38% of MGK’s total assets, compared with about 26% for QQQ.
This concentration increases sensitivity to the performance of a handful of mega-cap leaders.
What it means for investors
Mega-cap stocks, typically defined as companies with market capitalizations above $200 billion, have been the primary drivers of U.S. equity returns in recent years.
MGK’s narrow focus allows investors to lean directly into that trend, which can be advantageous during periods when the largest technology firms are outperforming.
QQQ, by contrast, offers broader exposure across the growth spectrum represented in the NASDAQ-100.
Its inclusion of slightly smaller large-cap growth companies provides an additional layer of diversification that can help moderate volatility during market downturns.
Ultimately, the choice comes down to priorities. Investors seeking the lowest possible fees and a high-conviction bet on mega-cap growth may gravitate toward MGK.
Those who value liquidity, diversification, and a marginally higher income stream may find QQQ to be the more balanced option.
Both funds remain powerful vehicles for accessing the long-term growth potential of the U.S. technology-driven economy.
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