The small cap stocks have been struggling in 2014 as investors have been taking profits in the high-flying biotech and niche technology names.
On the opposite end of the spectrum the mega cap stocks have not registered blockbuster gains, but they are holding up better than their smaller counterparts.
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A stock is considered to be a mega cap when its market capitalization is above $100 billion. The companies that fall into this category include household names such as Apple (NASDAQ:AAPL),Microsoft (NASDAQ:MSFT)and Exxon Mobil (NYSE:XOM). They tend to come from a variety of sectors with a larger concentration on technology and the financials.
There are three big ETF plays in the sector and while they are all similar, they have enough differences to break them down and look under the hood.
The iShares S&P 100 Index ETF (NYSE:OEF) is a basket of 100 of the largest stocks based in the U.S. The ETF is the largest of the three with over $4 billion in assets under management.
See also: Old School Dividend ETFs Leading The Way
In 2014 the ETF has a small gain of 0.6 percent and it currently pays a 1.9 percent dividend yield. The top holdings include AAPL, XOM, MSFT, and Johnson & Johnson (NYSE:JNJ). The expense ratio is 0.20 percent.
The Vanguard Mega Cap 300 Index ETF (NYSE:MGC) is composed of 300 mega cap stocks and currently has $978 million in assets under management. The ETF has the best performance of the three this year with a gain of 1.2 percent and also the lowest expense ratio at 0.11 percent.
The ETF is more diversified because of its exposure to 300 stocks, however the top holdings remain similar with Apple, Exxon Mobil, Google (NASDAQ:GOOG), Microsoft and Johnson & Johnson in the top four. The dividend yield is 2.0 percent.
A more concentrated version of the first two ETFs is the Guggenheim Russell Top 50 Mega Cap ETF (NYSE:XLG). As the name states, there are only 50 stocks in the ETF portfolio that amounts to $489 million.
The ETF has underperformed its peers in 2014 with a small loss of 0.1 percent. The top holdings are Apple, Exxon Mobile, Microsoft and Johnson & Johnson. The dividend yield is slightly higher at 2.3 percent and the expense ratio is the same as OEF at 0.20 percent.
When it comes down to choosing the best of the group the decision will be difficult as all three have similar portfolios, expenses, dividend yields, and performance. This call will come down to personal preference at to which factor is the most important.
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