Vanguard exchange-traded funds (ETFs) are some of the most popular, low-cost ways to achieve diversification across different sectors or market themes. The ultra-popular Vanguard S&P 500 ETF ( VOO -0.29% ) has $1.
08 trillion in net assets and just a 0.03% expense ratio. It is one of the cheapest ways to invest in the S&P 500 .
But there's another low-cost Vanguard Fund that is beating both the S&P 500 and the Nasdaq Composite year to date -- the Vanguard Mega Cap ETF ( MGC -0.32% ) . This fund has a slightly higher expense ratio at 0.
07%, but it is a negligible difference. For example, $10,000 invested in the Vanguard Mega Cap ETF incurs just $4 more in annual fees than the Vanguard S&P 500 ETF. Today's era of low fees is incredible, considering some brokerage commissions were $7 per transaction just a decade ago.
Here's why the Vanguard Mega Cap ETF could continue beating the S&P 500 and Nasdaq Composite over the long term. A low-cost way to (potentially) beat the market Buying a Vanguard fund to participate in the market for a low fee has plenty of benefits. But finding a Vanguard fund with low fees that can also beat the major indices is a whole different level.
The Vanguard Mega Cap ETF only has 207 holdings, compared to 503 for the Vanguard S&P 500 ETF. By concentrating in larger companies, the Vanguard Mega Cap ETF has higher exposure to growth sectors like tech and communications, consumer discretionary, and industrials than the Vanguard S&P 500 ETF, but less exposure .