Exchange traded funds have made gaining core equity exposure more accessible and cost-efficient for scores of investors. Investors can choose from an array of low-fee, broad market ETFs tracking a variety of indexes in an effort to gain exposure to hundreds or even thousands of stocks under one umbrella.
Vanguard, the second-largest U.S. ETF issuer, has several notable broad market ETFs, including the t Vanguard Total Stock Market Index ETF (NYSEArca: VTI), Vanguard Total International Stock ETF (NYSEArca: VXUS) and Vanguard Total Bond Market ETF (NYSEArca: BND). VTI features large-, mid- and small-cap U.S. stocks.
VTI comes with a 0.05% expense ratio and covers almost every listed U.S. stock. VTI tracks the CRSP U.S. Total Market Index, which includes almost every liquid U.S. stock on the market. VTI offers a notable alternative to standard S&P 500 index funds at a time when equities are perking up.
“VTI owns a basket of 3,592 publicly traded securities across the large, mid, and small-cap verticals. You can’t get much more diversified than that. The fund is market-cap weighted to give the largest stocks a greater share of its $70 billion asset base. Nevertheless, the top holding, Apple Inc (AAPL) only accounts for 2.5% of the total portfolio. That leaves a large swath of exposure to be distributed through the thousands of remaining holdings,” according to ETF Daily News.
VTI competes with ETFs such as the iShares Core S&P Total US Stock Market ETF (NYSEArca: ITOT) and the Schwab U.S. Broad Market ETF (NYSEArca: SCHB). SCHB tracks an index similar to total-market benchmarks, like the Russell 3000, but the it includes less exposure to the smallest stocks.
“SCHB claims one of the lowest industry expense ratios at just 0.03% annually. This fee has been incrementally lowered multiple times over the years, which adds to its attractiveness for long-term investors. It’s even conceivable that one day this ETF will charge as low as one basis point per year for access to its diversified stock portfolio,” adds ETF Daily News.
For more information on ETFs, visit our ETF 101 category.