Vanguard Total Stock Market ETF combines exposure to the entirety of the investable U.S. equity market with low turnover and a miniscule price.  All of its share classes earn a Morningstar Analyst Rating of Gold, except for its pricier investor share class, which is rated Silver. 

The fund tracks the CRSP US Total Market Index, which sweeps in all investable U.S. stocks. After applying liquidity screens, the index weights stocks by market cap. The index includes small- and micro-cap stocks, which slightly improve the portfolio’s overall diversification and can provide a performance edge over its Morningstar Category peers when smaller stocks rally. But they tend to be more volatile than large-cap stocks and can be more costly to trade. However, their impact is minimal given they make up less than 10% of the portfolio. 

Total-market funds mitigate transaction costs because they don’t target specific segments of the market and aren’t prone to forced buying or selling as a result of stocks entering or exiting a market segment. Still, a small amount of turnover can occur at the lower rungs of the portfolio. The index implements a buffer rules band around its lower market-cap bound to limit unnecessary turnover since dealing in thinly traded small and micro-caps can increase transaction costs. The index further reduces trading costs by spreading rebalancing trades over several days to limit market impact. 

The largest stocks in the United States, which make up the bulk of the portfolio, attract liquidity and widespread attention, such that new information is quickly reflected in their prices. Market-cap weighting is a sensible approach here. It harnesses the market’s collective wisdom of the relative value of each holding with the added benefit of low turnover and associated trading costs. 

However, market-cap weighting may expose the index to significant stock- or sector-level concentration during the market’s intermittent manic episodes. This can tilt the portfolio toward richly valued names or sectors, as was the case during the post-lockdown rally in 2020. In the long run, the benefits of broad diversification, low turnover, and a low fee outweigh these drawbacks.

Analyst Rating

A flagship total-market fund.

Associate Analyst

Mo'ath Almahasneh

Apple

Microsoft

Amazon

NVIDIA

Alphabet

Berkshire Hathaway Inc. - Ordinary Shares - Class B

Tesla

UnitedHealth Group

This broadly diversified portfolio is representative of the entire investable U.S. equity market. It leverages the market’s collective wisdom to size its positions and enjoys low turnover as a result. It earns a High Process Pillar rating.

High

Process

The portfolio managers on this fund are part of Vanguard’s Equity Index Group. This team has a global footprint and uses the latest in portfolio management technology to track the fund’s target index. They earn an Above Average People Pillar rating.

Gerard O’Reilly, Michelle Louie, and Walter Nejman comanage this strategy. O’Reilly, a principal at Vanguard, has been with the firm since 1992. Louie has been with the firm since 2010 and has managed portfolios since 2014. Nejman joined the firm in 2005 and worked in investment management since 2008.  

This duo not only oversees the portfolio but also executes trades on a day-to-day basis. Vanguard typically rotates portfolio managers around from one fund to another every few years to improve their breadth and depth of expertise. They also have access to Vanguard’s global trading desks, enabling them to make the most cost-efficient transactions in various global markets.

Vanguard’s portfolio managers are compensated with a bonus that factors in the gross, pretax performance of the fund relative to its objectives. This includes the manager’s record of tracking a benchmark index over the prior 12 months. These characteristics align the interests of the managers and investors.

Above Average

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

Parent

Vanguard Total Stock Market ETF

VTI tracks a cap-weighted index that measures the investable US equities market, encompassing the entire market-cap spectrum.

The fund seeks to track a market-cap-weighted portfolio that provides total market exposure to the US equity space.

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Valid until the market close on December 31, 2023 The S&P 500 closed November with a monthly gain of 8.92%, after a loss of 2.20% in October.

Moving Averages: S&P Finishes November Up 8.9%

Index funds like VTI and VOO are popular for building wealth with low-cost and simple investing. VOO has consistently outperformed VTI in terms of returns over various time periods. If a recession occurs in 2024, VOO is expected to continue outperforming VTI due to its exposure to larger, more stable companies.

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FAANG Gives Way to the ‘Magnificent Seven'

Real Estate and Financials sectors led the US stock market to its best week in about a year. The market's valuation is not overly high, and seasonality favors the bulls. Q3 earnings have been strong, with positive year-on-year profit advancement for the first time since Q3 2022.

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After a downbeat September, October, too, remained depressed for Wall Street. S&P 500 and U.S. treasuries hauled in maximum assets in the month.

ETF Asset Report for October: S&P 500 & Treasuries Top

Valid until the market close on November 30, 2023 The S&P 500 closed October with a monthly loss of 2.20%, after a loss of 4.93% in September.

Moving Averages: S&P Finishes October Down 2.2%

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Finding ETFs for long-term growth should be your priority if you're a newer investor. Even for those actively trading stocks to beat the marketing, holding a basket of ETFs for diversification is the best way to balance a portfolio and protect against sector-specific risk.

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Active ETFs have gained in popularity in recent years. However, some pundits have prematurely taken out their shovels for some funds.

Semi-Transparent ETFs Are Alive and Well

The Vanguard Total Stock Market ETF is a core holding in our portfolio. A FAQ we receive from readers involves the differences between VTI and other market index funds, such as the SPDR S&P 500 Trust ETF (SPY). Our experiences tell us the key is to get the allocations right based on the relative valuation of bonds, equity, precious metals, etc.

VTI: What's Different From SPY And How We Use It

NEW ORLEANS--(BUSINESS WIRE)--VTI Unveils Interim 1-Year PROTECT RCT Data at AAOpt Annual Meeting; NaturalVue® Contact Lenses Proven Safe & Effective for Myopia Management.

VTI Announces Positive Interim 1-Year Data from the PROTECT Clinical Trial at American Academy of Optometry Annual Meeting

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The third-quarter was a downbeat period for investors, mainly due to rising rates. Still, S&P 500 and broader market ETFs amassed most assets in the quarter.

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Overall, ETFs pulled in $329 billion in capital in the first nine months of 2023. With this, the ETF industry is on track to hit $438 billion in inflows this year if the trend continues.

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After a downbeat September, October started on a volatile note. While jitters may emanate from rising rates in the month, strength may be added by peaking rates, falling inflation, rebounding manufacturing activities and the upcoming holiday season.

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VOO and VTI are both solid options for a 100% US-based index fund, with low expense ratios and returns that track market returns. The main difference between VOO and VTI is the number of holdings, with VOO following the S&P 500 and VTI holding virtually every publicly traded company in the US. Despite slight differences in turnover, risk, dividends, and growth, and price return, VTI offers better diversification and inclusion of a possible needle in a haystack.

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The S&P 500 closed September with a monthly loss of 4.93%, after a loss of 1.71% in August.

Moving Averages: S&P Finishes September Down 4.9%

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Jack Bogle is often given as an example of a legendary investor whose disdain for exchange-traded funds was just as legendary. However, many overlook some important nuances, namely that he was not against all ETFs; just some of them and how they were used.

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Wall Street has been upbeat in the year-to-date frame as current stress in the market has been outweighed by superb gains in the first half.

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Overall, ETFs pulled in $37.3 billion in capital last week, taking year-to-date inflows to $329 billion. U.S. equity ETFs led the way higher with $30.6 billion in inflows.

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Greetings, VettaFi Voices! Now seems like a good time to talk about wrappers and which ones are best for different situations.

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Every week I am asked about Vanguard and its funds. So in this article I'll tackle six frequent questions, starting with the most popular.

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The S&P 500 closed August with a monthly loss of 1.71%, after a gain of 3.22% in July.

Moving Averages: S&P Finishes August Down 1.7%

September has historically been the worst month for owning U.S. stocks over the past five years. Economic concerns, rising interest rates this summer, a still inverted Treasury yield curve, and the upcoming restart of student loan payments could negatively impact consumer spending late in the year. The odds favor a potentially large equity market downturn during September-October, making it a risky time to own equities.

News for Vanguard Total Stock Market ETF ETF (VTI)