Investing in the retirement phase of your life cycle often requires a different mindset towards generating income or positioning in a more conservative manner. While there is nothing wrong with those pursuits, it may not appeal to those who are more comfortable taking risks or don’t rely heavily on spendable income from their retirement accounts.
In my experience, there is no such thing as a “one size fits all” approach to investing. Rather your portfolio should align with your individual risk tolerance, investment objectives, and time horizon. Those factors will play an important role in designing a strategy to meet or exceed your expectations over the long haul.
Those investors who want to still pursue a modest degree of growth in their portfolio may want to step outside of the traditional value-focused strategies that lean towards high income generation. This may also provide a unique dynamic that fosters surplus capital appreciation during favorable market trends.
Fortunately, there are two Vanguard ETFs that offer attractive characteristics for achieving this endeavor.
Mega Cap Growth
The Vanguard Mega Cap Growth ETF (MGK) is a low-cost option for those that want to access 150 of the largest growth-oriented stocks in the United States. Top holdings in MGK are companies such as Apple Inc (AAPL), Google Inc (GOOG) and Facebook Inc (FB). Not surprisingly, the technology sector makes up 25% of this index, while consumer discretionary stocks add another 23%. What you won’t find much of are utility, energy, and telecommunication companies.
The stocks in MGK are some of the biggest and savviest companies on earth. Their successful business models have allowed them to stand out and thrive, which in turn is reflected in their overall market share. They will likely continue to focus on expanding or refining their products and services rather than returning capital to shareholders in the form of dividends.
A fund such as MGK is going to be driven by more cyclical trends in high growth areas rather than a balanced sector dispersion such as you would find in a benchmark like the SPDR S&P 500 ETF (SPY). Nevertheless, this ETF has the potential for outperformance during strong bull markets and may offer the opportunity to overweight your portfolio towards consumer-driven themes.
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