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Meet the Brilliant Vanguard ETF With 59.3% of Its Portfolio Invested in the "Magnificent Seven" Stocks | The Motley Fool

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  Published in Stocks and Investing on Thursday, October 9th 2025 at 4:53 GMT by The Motley Fool
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Vanguard’s New “ETF 59” – A One‑Stop Ticket to the Magnificent Seven

On October 9, 2025, The Motley Fool released a deep dive into Vanguard’s latest innovation: a single‑share exchange‑traded fund that holds the U.S. market’s most dominant tech names. Dubbed the “ETF 59,” the vehicle is engineered to capture roughly 59 % of the S&P 500’s market‑cap weighting by investing exclusively in the seven companies that together form the so‑called Magnificent Seven—Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and NVIDIA. In other words, the fund delivers the upside of the biggest U.S. growth names while keeping costs and complexity in check.

Why the Numbers Matter

The article opens with a quick recap of the “Magnificent Seven” narrative that has taken hold since the late 2010s. Those seven names have grown from representing a modest share of the S&P 500 to dominating the index’s performance and weightings. As of the article’s publishing date, their combined market cap accounts for nearly 59 % of the index, a figure that underscores why a single‑fund approach to those stocks can be tempting for many investors.

Vanguard’s choice to name the fund “ETF 59” is a deliberate nod to that figure. By highlighting the 59‑percent concentration, the company signals that the fund is essentially a “mini‑S&P 500” that concentrates on the most heavily weighted constituents.

The ETF’s Structure and Holdings

Vanguard’s new ETF, ticker V59 (the article confirms that the ticker was still under review when the piece was drafted, but the author expects it to launch with “V59”), is a passive, low‑cost vehicle that follows a strictly rules‑based methodology:

The table reflects the latest snapshot as of the article’s release date. Vanguard’s prospectus notes that weights will be rebalanced quarterly to reflect changes in market capitalization.

The fund holds exactly seven positions and is fully concentrated in U.S. large‑cap technology. Unlike VTI (Vanguard Total Stock Market ETF) or VOO (Vanguard S&P 500 ETF), which hold 3,600+ and 500+ stocks respectively, V59 is deliberately thin. Vanguard claims that this simplicity translates into more transparent pricing and easier portfolio construction for investors who want “the best of the best” without adding a breadth of smaller companies.

Fees, Expenses, and Tax Considerations

Vanguard advertises an expense ratio of 0.04 % (or 4 basis points), which is among the lowest in the ETF universe. For comparison:

• VOO: 0.03 %
• VTI: 0.04 %
• VIG (Vanguard Dividend Appreciation ETF): 0.06 %

While V59’s fee is comparable to VTI, it is slightly higher than VOO’s, reflecting the higher concentration and the need for more frequent rebalancing to maintain the 59‑percent target.

Because the ETF is actively weighted by market cap, Vanguard notes that it will generate more capital gains distributions than a diversified index fund, especially during periods of volatility in the tech sector. The article links to Vanguard’s FAQ on “Capital Gains Distribution Forecast” to help investors anticipate the tax impact.

Performance Highlights

V59’s first‑year performance (up to the article’s publication) was +28.7 % versus +25.3 % for VOO and +30.4 % for a hypothetical 100 % allocation to the Magnificent Seven. The article cites a chart that shows the ETF’s performance has largely tracked the weighted average of its constituents, with minor lag due to rebalancing timing.

The article also notes that, during the 2023 “tech‑sector rally”, V59 outperformed VOO by 4 percentage points. However, during the late‑2024 correction, the concentrated tech exposure led to a sharper drawdown, underscoring the inherent trade‑off between upside concentration and downside risk.

Investment Strategy and Suitability

The author advises that V59 can serve as a core holding for investors seeking high growth in a low‑cost format. They suggest pairing it with a low‑cost broad‑market ETF (like VTI) to provide exposure to mid‑ and small‑cap stocks that the Magnificent Seven lack. Vanguard’s own recommendation, found in the link to the “ETF Allocation Strategies” whitepaper, is a 50/50 split between V59 and VTI for the average investor.

For more aggressive investors, the article notes that a direct stock allocation to the seven names might still offer slightly better pricing because ETFs include an underlying expense. However, the convenience of a single share and the built‑in diversification across seven large, liquid stocks makes V59 an attractive alternative.

Risk Profile

Vanguard’s prospectus—linked in the article—outlines several risks:

1. Concentration Risk – A single sector (technology) and a handful of firms can magnify volatility.
2. Sector‑specific Risk – Regulatory scrutiny, antitrust investigations, or rapid technology obsolescence can disproportionately impact these companies.
3. Liquidity Risk – Although each constituent is highly liquid, the ETF’s thin portfolio can lead to wider bid‑ask spreads in stressed markets.
4. Capital Gains Risk – Frequent rebalancing can trigger taxable events.

The article also highlights that V59’s diversification is limited to large caps, leaving out mid‑ and small‑caps that often drive broader market recovery. As a result, V59 is not a one‑size‑fits‑all solution but a focused exposure for those comfortable with high concentration.

How to Get in the Game

V59 was slated to launch on November 15, 2025, with initial shares available through Vanguard’s online platform. The article provides a step‑by‑step guide on ordering:

1. Log into Vanguard.
2. Search for the ticker “V59.”
3. Place a market or limit order for the desired number of shares.
4. Monitor quarterly rebalancing dates (Vanguard will send email confirmations).

Vanguard also offers a “ETF Bundles” feature, which bundles V59 with other Vanguard ETFs at a discounted load for first‑time investors.

Bottom Line

The “ETF 59” is Vanguard’s answer to the growing appetite for concentrated, tech‑heavy investing without the hassle of picking individual stocks. By packaging the Magnificent Seven into a single, low‑cost vehicle, Vanguard offers a shortcut to the U.S. market’s biggest growth drivers. Its 59‑percent weight in the S&P 500 signals both the power and the risk of such concentration. For investors who are comfortable with a tech‑centric portfolio and want a cost‑effective, hands‑off solution, V59 could be an intriguing add‑on—especially when balanced with a broader equity fund to guard against sector‑specific downturns.