You Don’t Even Need Your RMD Money. These 3 ETFs Turn a Forced Withdrawal Into Money That Keeps Growing

You hit age 73 and the IRS makes you pull money out of your retirement accounts. You look at the check and think: I don’t actually need this. The mortgage is paid, and Social Security covers the essentials. But that required minimum distribution is going to land in your taxable brokerage account whether you like it or not, and the question becomes what to do with it. If the goal is to keep that money compounding for your heirs, a charity, or just your own peace of mind, three ETFs deserve a hard look: the SPDR Portfolio S&P 500 ETF (NYSEARCA:SPYM), the Vanguard Morningstar Mega Cap Growth ETF (NYSEARCA:MGK), and the Pacer US Cash Cows 100 ETF (NYSEARCA:COWZ). Each one turns a forced withdrawal into something that keeps working.

SPYM: The Core Holding That Costs Almost Nothing

SPYM tracks the S&P 500, which is about as boring and effective as it gets. The case for putting RMD dollars here starts with cost: a 0.02% expense ratio, the lowest of any major S&P 500 ETF on the market. That means roughly $999.80 of every $1,000 stays invested each year, and over a decade of compounding the fee savings add up to real money for your heirs. The fund’s low-cost credentials became national news in July 2026, when the U.S. Treasury designated SPYM as the exclusive default ETF for the newly launched Trump Accounts program, citing its rock-bottom fees and broad market exposure.

The top positions read like a who’s who of American business at its most dominant. NVIDIA leads the fund at roughly 7.9% of assets, followed by Apple near 7.5%, then Microsoft at around 5.7% and Alphabet close behind at roughly 5.6%, with Amazon rounding out the top five. Those five names reflect genuine growth concentration rather than passive ballast. The fund has returned close to 18% on a total return basis over the trailing year and has averaged roughly 11% annually since its 2005 inception. Total assets now top $157 billion, a figure that crossed $100 billion as recently as December 2025 and has surged further since SPYM’s Trump Account selection. A modest quarterly dividend means you can set reinvestment on autopilot and let compounding do the rest.

MGK: A Growth Tilt for the Long Runway

If SPYM is the anchor, MGK serves as the portfolio’s accelerator. The Vanguard Morningstar Mega Cap Growth ETF concentrates on the largest US growth companies and charges a 0.05% expense ratio. That is still an exceptionally low fee for the quality it delivers. The fund tracks the Morningstar US Mega Cap Growth Index (the name changed in July 2026 when Vanguard rebranded its index suite following Morningstar’s acquisition of CRSP), and in April 2026 the fund executed a 5-to-1 share split, bringing the price per share into a more accessible range.

As of July 31, 2026, the top ten holdings together account for 67% of the fund’s net assets. NVIDIA leads at 13.5%, Apple sits at 13.2%, and Alphabet follows at 10.8%. Microsoft holds the fourth spot at 9.5%, with Amazon rounding out the top five at 5.2%. Total net assets stand at roughly $33.5 billion. The fund’s dividend stays modest because its holdings tend to plow cash into research and buybacks rather than distributions, but MGK still pays quarterly. For RMD dollars with a 15- or 20-year horizon because you’re planning to pass them on, MGK provides the reinvestment vehicle to match that ambition.

COWZ: Cash Flow Discipline as a Ballast

COWZ takes a fundamentally different approach from the other two. It screens the Russell 1000 for the 100 companies with the highest free cash flow yield, then weights those names by actual cash generated rather than by market cap. The portfolio rebalances quarterly as valuations shift, so its sector makeup looks nothing like the broad market and changes meaningfully over time.

That rotation is worth understanding in concrete terms. As of mid-September 2026, the top positions include Salesforce at roughly 2.5% of the fund, Marathon Petroleum near 2.3%, Newmont and Intuit each around 2.2%, and Booking Holdings just above 2.1%. Technology has become the largest sector exposure at about 25.7%, followed by healthcare near 19.9%, consumer cyclical at around 12.8%, and energy at roughly 11.9%. The fund has shifted meaningfully from the energy-heavy posture it held two years ago, which is the methodology doing exactly what it promises: rotating toward businesses generating the most free cash relative to their price. Fund assets stand at roughly $19.8 billion.

For an RMD reinvestor, the quarterly distributions are the central draw. COWZ has paid on a quarterly cadence since its December 2016 inception, and the variable payout reflects actual cash generation from the underlying businesses rather than a fixed commitment. The trailing one-year total return sits near 18%, a number that trails the broad market over the same period but reflects the fund’s value-tilted character. The variability in distributions is a feature, not a flaw, because it signals alignment between what the portfolio earns and what it pays out.

The Real Trade-Off

All three funds are equity funds, which means market risk is part of the deal. Reinvest a full year’s RMD in the fall and a 20% drawdown becomes a 20% loss on that capital. You are trading short-term stability for long-term growth, and that trade only makes sense if you truly do not need the cash and can leave it alone through a bear market. Bond funds or a high-yield savings account will feel calmer in a downturn, even if they grow more slowly.

What you get in exchange is a coherent three-part structure. A near-zero-cost S&P 500 core, a mega-cap growth engine concentrated in the companies driving the next decade of earnings, and a cash-flow-screened ballast that gravitates toward sectors the other two underweight. For a retiree whose RMD is essentially surplus capital, that is a portfolio built to keep compounding long after the withdrawal clears.

Editor’s note: This update corrects SPYM’s trailing one-year total return to approximately 18% (from 20%) and refreshes the fund’s top holdings to reflect current weightings, with NVIDIA at roughly 7.9%, Apple at 7.5%, and Microsoft at 5.7%. It adds context on SPYM’s selection as the default ETF for the Trump Accounts program launched July 4, 2026. MGK’s holdings are updated to July 31, 2026 data, with a top-ten concentration of 67% and total net assets of roughly $33.5 billion, and the fund’s April 2026 share split is noted. COWZ’s trailing one-year return is corrected to approximately 18% (from 24%), its top-five holdings are updated to Salesforce, Marathon Petroleum, Newmont, Intuit, and Booking Holdings, and its sector weights are refreshed to Technology 25.7%, Healthcare 19.9%, Consumer Cyclical 12.8%, and Energy 11.9%.

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