Meet the Spectacular Vanguard ETF With Almost 40% of Its Portfolio Invested in Nvidia, Apple, Microsoft, and Amazon

Growth stocks have been the undisputed market leaders for an extended period of time. Consider this statistical nugget: For the five years ended Oct. 20, the S&P 500 Growth index returned 60.6% compared to 56.7% for the S&P 500.

Much of the leadership exhibited by big growth stocks is attributable to the "Magnificent Seven" -- the seven behemoth tech and tech-affiliated stocks that have been multi-year market juggernauts. That group includes Nvidia, Apple, Microsoft, and Amazon.

Put simply, investors who owned some or all of that quartet over the past few years are likely pleased with the portfolio's performance. On the other hand, getting it exactly right with the Magnificent Seven, or any other corner of the equity market for that matter, is no easy feat.

The Vanguard Growth ETF offers access to four famed growth stocks at one time. Image source: Getty Images.

Don't worry because the Vanguard Growth ETF (NYSEMKT: VUG) eases that burden. Nvidia, Microsoft, Apple, and Amazon are the top four holdings in the Vanguard ETF, combining for about 39% of the fund's roster.

Lots of tech leaders under the VUG umbrella

The $195 billion Vanguard Growth ETF, which turns 22 years old in January, holds 160 stocks hailing from 11 stocks -- traits implying some level of diversification. But in reality, VUG is a de facto tech ETF as it allocates 62.1% of its roster to that sector, or more than triple the weight assigned to consumer discretionary, its second-largest sector exposure.

That sector concentration has worked in investors' favor. Nvidia, Microsoft, and Apple are VUG's top three holdings, combining for a third of the ETF's weight -- and they're the three most valuable companies in the world. That trio has a combined market capitalization of $12.17 trillion, or more than the GDP of many countries.

At the sector level, VUG is actually more diverse than meets the eye. It classifies Meta Platforms, Alphabet Class A shares and Alphabet Class C shares as tech stocks. However, if we're getting our sector rules/ETF construction "nerd on," those are communication services names, not tech stocks.

Those three stocks combine for 11% of the VUG roster. Throw in a 1.56% allocation to Netflix, another communication services stock, and the Vanguard ETF's technology exposure is closer to half its weight.

Even if sector rules are put aside, there's no denying that VUG is an efficient avenue for investors looking for Nvidia, Microsoft, Apple, and Amazon exposure under one umbrella. Actually, all seven of the Magnificent Seven stocks are found among the ETF's top 10 holdings.

More Vanguard Growth Fund perks

The Vanguard Growth Fund has other fine points. It can be a go-to option for capital-constrained investors who want exposure to the likes of Nvidia, Microsoft, Apple, and Amazon, but can't afford to build sizable stakes in those high-priced stocks.

Likewise and acknowledging that past performance isn't a guarantee of future returns, VUG does have some enviable history as it's beaten the S&P 500 Growth index over the trailing three- and five-year periods.

The Vanguard Growth Fund also lives up to the Vanguard heritage of being cheap to own. Its annual fee of 0.04%, or $4 on a $10,000 stake, is well below the category average of 0.93%, according to issuer data. That makes this fund ideal for buy-and-hold investors who want to bet on growth stocks without selecting individual names.

Todd Shriber has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, and Vanguard Index Funds - Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.