MGK: Selecting The Best Mega Caps

seekingalpha11-06

Vanguard Mega Cap Growth Index Fund ETF Shares, with a low expense ratio of 0.07%, offers exposure to 70 top growth-oriented mega-cap stocks.The fund's advanced methodology, focusing on EPS growth and...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2481761036?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/610990634/image_610990634.jpg","is_english":true,"pubTime":"2024-11-06 18:14","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2481761036","market":"sh","top_or_hot":-1,"title":"MGK: Selecting The Best Mega Caps","media":"seekingalpha","content":"<div>\n<p>Vanguard Mega Cap Growth Index Fund ETF Shares, with a low expense ratio of 0.07%, offers exposure to 70 top growth-oriented mega-cap stocks.The fund's advanced methodology, focusing on EPS growth and...</p>\n\n<a href=\"https://seekingalpha.com/article/4733597-mgk-etf-selecting-best-mega-caps\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>MGK: Selecting The Best Mega Caps</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMGK: Selecting The Best Mega Caps\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-06 18:14 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4733597-mgk-etf-selecting-best-mega-caps><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Vanguard Mega Cap Growth Index Fund ETF Shares, with a low expense ratio of 0.07%, offers exposure to 70 top growth-oriented mega-cap stocks.The fund's advanced methodology, focusing on EPS growth and...</p>\n\n<a href=\"https://seekingalpha.com/article/4733597-mgk-etf-selecting-best-mega-caps\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://seekingalpha.com/article/4733597-mgk-etf-selecting-best-mega-caps","article_id":"2481761036","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/610990634/image_610990634.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481761036","pubTimestamp":1730888078,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Vanguard Mega Cap Growth Index Fund ETF Shares, with a low expense ratio of 0.07%, offers exposure to 70 top growth-oriented mega-cap stocks.The fund's advanced methodology, focusing on EPS growth and","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","BK4585":"ETF&股票定投概念","MGK":"Vanguard Mega Cap Growth ETF"},"translate_title":"MGK：选择最佳巨型股","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MGK":0.9},"content_text":"Vanguard Mega Cap Growth Index Fund ETF Shares, with a low expense ratio of 0.07%, offers exposure to 70 top growth-oriented mega-cap stocks.The fund's advanced methodology, focusing on EPS growth and return on assets, results in a concentrated portfolio with impressive performance.Despite higher risks, as evidenced by a -33% drawdown in 2022, MGK's superior CAGR and solid Sharpe and Sortino ratios make it rewarding.Given strong Q3 earnings, a healthy US economy, and positive seasonality, MGK is rated a buy-and-hold into Q4 earnings.peshkov/iStock via Getty Images  Mega-cap stocks get their status for a reason; success. These are the most successful companies in the most lucrative sectors, and owning them makes financial sense. There are various ways to do this, but one simple and effective way is to invest in the Vanguard Mega Cap Growth Index Fund ETF Shares (NYSEARCA:MGK). Introducing MGK MGK is a passively managed fund with a low expense ratio of 0.07% and a large AUM of $23B. It seeks to track the CRSP US Mega Cap Growth Index, which is an interesting Index as it employs some advanced methodology in its selection process.  CRSP scores each security and determines its weight in the appropriate Growth index using the following factors:  Future long-term growth in earnings per share (EPS) Future short-term growth in EPS 3-year historical growth in EPS 3-year historical growth in sales per share Current investment-to-assets ratio, and return on assets.   More details on the methodology can be found here. It's a complex process, but does it work? Firstly, let's take a look at the top 10 holdings. If we compare them to the S&P500 (SPY), we can see some differences in the stocks selected (I am ignoring the weightings for now). This tells us MGK does not simply select the largest stocks as the Invesco S&P 500 Top 50 ETF (XLG) does. Broadcom (AVGO) is pushed down from the top 10 to the 12th largest holding due to its growth score, and Berkshire Hathaway (BRK.B) is excluded entirely as it does not meet the selection criteria. Top 10 (Seeking Alpha) Here is how the top 10 is weighted. Seeking Alpha Weighting is a combination of market cap and growth score. It leads to a very concentrated portfolio, with 63.5% of the holdings in the top 10. A total of 70 stocks are selected, but when you get out of the top 40, each stock is weighted less than 0.5%. Indeed, the last 20 stocks only constitute 6% of the portfolio, so hardly deserve a mention. As might be expected, technology is the dominant sector. Seeking Alpha And this being a growth-focused fund, the PE ratio is high. Vanguard Performance MGK's methodology is advanced and leads to outsized returns. Here's how it compares to SPY and XLG over the long term. Data by YCharts The outperformance is clear. MGK has a lot in common with XLG, which also has a concentrated portfolio in mega-cap stocks. However, MGK outperforms over most timeframes, and we can see it pulls ahead in the 2020-2022 rally and the rally starting at the 2022 low. Data by YCharts What worries me slightly about the above chart is the larger drawdown in 2022. The graphic below illustrates this better. Portfolio Visualizer A -33% drawdown highlights MGK does carry higher risks. When a growth fund with a PE ratio of 37.5 meets an environment like 2022 - a year of Fed tightening and recession concerns - the result is ugly. That said, MGK's Sharpe Ratio and Sortino Ratios are not too much lower than XLG's and the CAGR is far superior. Portfolio Visualizer In short, there is more risk, but also more reward. MGK Outlook Earnings in mega-cap stocks remain strong, and technology is projected to grow steadily by the S&P. S&P Global Q3 revenue growth has been impressive. Here's the YoY change in some of MGK's largest holdings: Meta (META) +19% Microsoft (MSFT) +16% Alphabet (GOOGL) + 15% Amazon (AMZN) +11% Tesla (TSLA) +8% Apple (AAPL) +6% We know MGK could underperform in a recessionary environment as its performance in 2022 warned, but the current data suggests the economy remains healthy. The labour market is a concern, but the weakness in July seems to have stabilized and a 4.1% unemployment rate is not signaling danger. Indeed, it is likely necessary to get inflation sustainably near 2%. I may re-assess after Q4 earnings, but with markets now entering a typically bullish period in November and December, it seems a good time to own MGK. Conclusion Owning the most successful and largest companies is a profitable strategy, and MGK provides exposure to the 70 largest growth-orientated companies. Its selection process leads to outperformance when compared to XLG, although there is a higher risk under certain conditions.  Under the current environment, with a solid US economy, good earnings growth, and positive seasonality, MGK looks set to perform well, and I rate it a buy-and-hold into Q4 earnings.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481761036"}