An exchange traded fund that tracks the S&P 500 provides a good entry point to large capitalization stock exposure. However, if you want to round out your portfolio, there are some other ETFs that could help supplement your large-cap positions.
For instance, the Vanguard Extended Market Index ETF (NYSEArca: VXF) acts as a good pair to an S&P 500 index fund, writes Morningstar analyst Michael Rawson.
“This fund tracks the S&P Completion Index, which holds virtually every liquid U.S. stock outside of those in the S&P 500 Index,” Rawson said.
The VXF ETF tracks non-S&P 500 companies, like Facebook (NasdaqGS: FB), Las Vegas Sands (NYSE: LVS) and other companies that don’t meet S&P 500’s 50% public float requirement, domicile requirement and recent initial public offerings 12 month seasoning requirement.
Looking at market capitalization, the S&P 500 leans toward mega-cap stocks, whereas the S&P Completion Index includes a majority stake in mid- and small-cap stocks. [Mid-Cap ETFs in the Groove]
“The result is that the Completion Index’s portfolio behaves very similarly to a mid-cap index fund,” Rawson added.