Instead of meticulously browsing through thousands of stocks to craft an equity portfolio, investors can utilize a single broad market exchange traded fund to garner a diversified investment.
For instance, broad Vanguard stock ETFs, like the Vanguard Total Stock Market ETF (NYSEArca: VTI), allows investors to follow thousands of U.S. stocks through a single investment. VTI tracks 3,684 stocks at a low 0.05% expense ratio. [Craft An Investment Portfolio Using 5 ETFs]
The “low expense ratios, exposure to virtually all publicly traded U.S. stocks, and well-regarded parent company make them the default choice for many investors,” writes Adam Zoll for Morningstar.
Other broad ETFs that try to provide total U.S. stock exposure include the iShares Russell 3000 ETF (NYSEArca: IWV), which has 2,979 holdings and a 0.20% expense ratio; Schwab U.S. Broad Market ETF (NYSEArca: SCHB), which has 2,007 holdings and a 0.04% expense ratio; and iShares Core S&P Total US Stock Market ETF (NYSEArca: ITOT), which has 1,501 holdings and a 0.07% expense ratio.
However, potential investors should try sticking to one total market ETF. While the different ETFs may follow varying indexing methodologies, many of the underlying holdings will overlap.