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, so the question becomes what to do with it. For anyone whose goal is to keep that money compounding for heirs, a charity, or just long-term peace of mind, three ETFs deserve a close 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 investing 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 accumulate into real money for heirs. The fund’s low-cost credentials earned national attention in July 2026, when the U.S. Department of the Treasury selected SPYM as the exclusive default ETF for the newly launched Trump Accounts program. The Treasury cited the fund’s rock-bottom fee and broad market exposure as the decisive factors, and the program, established under the Working Families Tax Cut Act, officially launched on July 4, 2026.

The top positions reflect the dominant forces in American business. NVIDIA leads the fund at roughly 8.1% of assets, followed by Apple near 7.3% and Microsoft at around 5.9%. Amazon sits fourth at roughly 3.8%, with Alphabet rounding out the top five at about 3.1%. Together, those five names illustrate genuine growth concentration at the top of a broadly diversified basket. Total assets now top $184 billion, a figure that crossed $100 billion as recently as December 2025 and has climbed sharply since SPYM’s Trump Account selection. The fund has returned roughly 16% on a total return basis over the trailing year and has averaged approximately 11% annually since its November 2005 inception. A modest quarterly dividend lets investors set reinvestment on autopilot and let compounding take over.

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, which remains an exceptionally low fee for the quality it delivers. The fund tracks the Morningstar US Mega Cap Growth Index (the name shifted 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 that brought the price per share into a more accessible range.

As of September 30, 2026, the top ten holdings together account for about 64.5% of the fund’s net assets. NVIDIA leads at 13.7%, Apple sits at 12.5%, and Microsoft follows at 9.5%. Alphabet holds the fourth spot at roughly 5.0%, with Meta Platforms rounding out the top five at about 5.0% as well. Amazon and Broadcom follow closely behind. Total net assets stand at roughly $34 to $35 billion. The fund pays a modest quarterly dividend because its holdings tend to plow cash into research and buybacks rather than distributions. For RMD dollars with a 15- or 20-year horizon because you plan to pass them on, MGK provides a reinvestment vehicle built 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 capitalization. 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 25.8%, followed by healthcare near 20.2%, consumer cyclical at around 12.2%, and energy at roughly 12.4%. The fund has shifted meaningfully from the energy-heavy posture it held two years ago. That is the methodology doing exactly what it promises: rotating toward businesses generating the most free cash relative to their price. Fund assets stand at approximately $19 to $20 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 variability in distributions is a feature rather than a flaw, because it signals alignment between what the portfolio earns and what it pays out. The trailing one-year total return has been running ahead of the broad market over certain measurement periods, a testament to the methodology’s recent effectiveness even as its value-tilted character tends to lag during pure growth rallies.

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. The trade here is short-term stability in exchange for long-term growth, and it only makes sense if you truly do not need the cash and can leave it untouched through a bear market. Bond funds or a high-yield savings account will feel calmer in a downturn, even if they grow more slowly over time.

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 combination is a portfolio built to keep compounding long after the withdrawal clears.

Editor’s note: This update revises SPYM’s AUM to approximately $184 billion (up from the prior figure of $157 billion), corrects the fund’s trailing one-year total return to roughly 16%, and refreshes the top-five holdings to reflect current weightings with NVIDIA at about 8.1%, Apple at 7.3%, Microsoft at 5.9%, Amazon at 3.8%, and Alphabet at 3.1%. MGK’s holdings are updated to September 30, 2026 data, correcting the prior listing of Alphabet at third position (10.8%): Alphabet now ranks fourth at roughly 5.0% and Meta Platforms is fifth at about 5.0%, with the top-ten concentration revised to 64.5% and total net assets updated to roughly $34 to $35 billion. COWZ sector weights are refreshed to Technology 25.8%, Healthcare 20.2%, Consumer Cyclical 12.2%, and Energy 12.4%, and fund assets are updated to approximately $19 to $20 billion.

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