Investment researcher Morningstar says Vanguard Total Stock Market (NYSEArca: VTI) is its favorite ETF for index-based exposure to U.S. stocks “as it provides the broadest possible exposure for the incredibly low cost of 0.05%.”
VTI is one of the 10 largest ETFs listed in the U.S. with total assets of more than $34.3 billion.
S&P 500 ETFs attract more trading volume but the index is dominated by large-cap stocks and does not include most mid-caps or any small-cap and micro-cap stocks, says Morningstar fund analyst Michael Rawson.
“In contrast, VTI invests in most liquid U.S. stocks, sweeping in more than 3,500 holdings across the market-cap spectrum. Over the long run, small-cap stocks tend to outperform their larger counterparts,” he wrote in a commentary this week.
VTI is structured as a separate share class of Vanguard Total Stock Market Index mutual fund.
“Holding a total-market index fund is more efficient than holding separate funds for large-cap and small-cap exposure because the broad fund requires less turnover as stocks move up and down in size,” Rawson notes. “VTI is an ideal fund for passive investors who believe in the benefits of index investing, as well as for active investors who wish to follow a core-and-explore approach. Few equity funds are as diversified as VTI.”
Vanguard Total Stock Market
