<div id="readability-page-1">The S&amp;P 500 (^GSPC 0.35%) index is up by 30% over the past year, and one-fifth of that gain is attributable to a single stock: Nvidia (NVDA -3.22%). The chip giant has delivered a return of 186% over the last 12 months, and with a valuation of $3.6 trillion, it represents 7% of the total value of the S&amp;P 500. But Nvidia isn't alone. It's part of a collection of technology giants dubbed the &#34;Magnificent Seven&#34; which have generated an average return of 56% over the past year. The companies have a combined market capitalization of $16.9 trillion, and represent 32.1% of the entire S&amp;P 500. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/478e849c1c966d07f3318be8b25dc00e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="541" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/478e849c1c966d07f3318be8b25dc00e.png"/> NVDA data by YCharts. Simply put, investors who don't have exposure to the above tech stocks have likely underperformed the broader market. But the good news is that they can get that exposure very easily through an appropriate exchange-traded fund (ETF). The Vanguard Mega Cap Growth ETF (MGK 0.01%) has nearly half of its portfolio invested in four of America's largest tech stocks. It consistently outperforms the S&amp;P 500 over the short and long term. Here's why it's a great buy for investors of all experience levels. <h2>Large positions in the most popular AI stocks</h2> The Vanguard Mega Cap Growth ETF holds just 71 different stocks. The fund is highly concentrated, with the technology sector representing 61.4% of the value of its portfolio, followed by the consumer discretionary sector at 20.3%. In fact, its top four holdings alone represent 45.1% of its portfolio, but they are among the top artificial intelligence (AI) powerhouses that practically every investor wants to own. <div><table> <thead> <tr> <th> Stock </th> <th> Vanguard Mega Cap Growth ETF Weighting </th> </tr> </thead> <tbody> <tr> <td> 1. Apple (AAPL 0.59%) </td> <td> 13.36% </td> </tr> <tr> <td> 2. Nvidia </td> <td> 12.52% </td> </tr> <tr> <td> 3. Microsoft (MSFT 1.00%) </td> <td> 12.35% </td> </tr> <tr> <td> 4. Amazon (AMZN -0.64%) </td> <td> 6.82% </td> </tr> </tbody> </table></div> Data source: Vanguard. Portfolio weightings are accurate as of Oct. 31, 2024, and are subject to change. Apple just rolled out its Apple Intelligence software, which it developed with OpenAI. It delivers a slate of new AI features for owners of the latest iPhones, iPads, and Mac computers, including powerful writing tools that can summarize and generate text content for emails or messages. Apple has over 2.2 billion active devices worldwide, so it could become the biggest distributor of AI to consumers. Nvidia supplies the most popular data center graphics processing units (GPUs) for developing AI models. The company's data center revenue generated triple-digit percentage growth in each of the last six quarters because demand continues to outstrip supply. That momentum should continue now that Nvidia is shipping its powerful new Blackwell GPUs, with CEO Jensen Huang recently describing demand as &#34;staggering.&#34; Microsoft and Amazon are two of Nvidia's top customers. They fill their data centers with GPUs and rent the computing power to businesses and developers to help them deploy AI models in an affordable manner. Plus, both companies have developed their own AI chatbots and virtual assistants, which could become big revenue drivers in the future. Each of the Magnificent Seven stocks are top-10 positions in the Vanguard Mega Cap Growth ETF. But it isn't all about AI. The fund also holds stocks like pharmaceutical giant Eli Lilly, payments powerhouse Visa, retail titan Costco Wholesale, and fast food goliath McDonald's. The Vanguard Mega Cap Growth ETF is incredibly cheap to own. It has an expense ratio of just 0.07%, which is the portion of the fund deducted each year to cover management costs. Comparable funds have an average expense ratio of 0.94% (according to Vanguard), and such a high cost can eat away at investors' returns over the long run. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83OTg2MjkvYS1kaWdpdGFsbHktcmVuZGVyZWQtM2QtYnVsbC1zdGFuZGluZy1vbi1hLWNvbXB1dGVyLWNoaXAtcmVhZHktdG8tY2hhcmdlLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="393" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83OTg2MjkvYS1kaWdpdGFsbHktcmVuZGVyZWQtM2QtYnVsbC1zdGFuZGluZy1vbi1hLWNvbXB1dGVyLWNoaXAtcmVhZHktdG8tY2hhcmdlLmpwZyZ3PTcwMA"/>Image source: Getty Images. </div> <h2>The Vanguard Mega Cap Growth ETF consistently outperforms the S&amp;P 500</h2> The Vanguard Mega Cap Growth ETF has delivered a compound annual return of 13% since it was established in 2007, which is better than the average annual gain of 10.2% in the S&amp;P 500 over the same period. The ETF has delivered an accelerated compound annual return of 15.9% over the last 10 years, specifically. This aligns with the rapid adoption of technologies like enterprise software, cloud computing, smartphones, and AI. That compares to a 13.2% annual return in the S&amp;P 500 over the past decade. Even though AI isn't the whole story for the Vanguard Mega Cap Growth ETF, this technology will have a massive effect on its returns going forward, given the sheer size of its positions in stocks like Nvidia, Apple, Microsoft, and Amazon. Therefore, if AI lives up to some of Wall Street's forecasts, the ETF should do extremely well from here. Goldman Sachs thinks AI will add $7 trillion to the global economy over the next 10 years, and PwC places that figure at $15.7 trillion by 2030. Those are just two of many multi-trillion-dollar estimates published so far. Conversely, if AI fails to live up to the hype, many stocks in the Magnificent Seven could lose a significant amount of value. That's why investors should consider owning the Vanguard Mega Cap Growth ETF as part of a balanced portfolio that doesn't already have a high degree of exposure to those tech giants. </div>

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The Vanguard Mega Cap Growth ETF has 45.1% of its portfolio invested in major tech stocks like Nvidia, Apple, Microsoft, and Amazon. This ETF, which focuses heavily on AI-related companies, has consistently outperformed the S&P 500, delivering a 13% annual return since its inception in 2007. With a low expense ratio of 0.07%, it offers an affordable way for investors to gain exposure to top-performing tech stocks, which have significantly contributed to the S&P 500's gains over the past year.

- The S&P 500 index has increased by 30% over the past year, with Nvidia contributing significantly to this gain, delivering a 186% return.  
- The Vanguard Mega Cap Growth ETF, which holds a concentrated portfolio of major tech stocks, has consistently outperformed the S&P 500, boasting a low expense ratio of 0.07%.  
- As AI technology continues to grow, the ETF's performance is expected to benefit, although potential risks remain if AI does not meet market expectations.

Meet the Spectacular Vanguard ETF With 45.1% of Its Portfolio Invested in Nvidia, Apple, Microsoft, and Amazon