Consequently, investors can pair a S&P 500 ETF with something like VXF to gain total U.S. market exposure. Rawson suggested something like 78% in S&P 500 stocks and 22% in an ETF like VXF.
However, investors can also take on one ETF, such as the Vanguard Total Stock Market ETF (NYSEArca: VTI) or the iShares Core S&P Total US Stock Market ETF (NYSEArca: ITOT), to gain total U.S. stock exposure.
“Those already holding an S&P 500 fund looking to round out their portfolio with mid- and small-cap stocks are faced with a choice: either add a fund tracking a completion index such as this, resulting in two positions, or sell the S&P 500 fund and allocate the proceeds to a total market fund, resulting in just one holding,” Rawson said.
Investors, though, would probably be better off sticking to the two-fund style if selling the S&P 500 ETF results in a capital gains hit.
For more information on large-cap funds, visit our large-cap category.
Max Chen contributed to this article.