Vanguard Total Stock Market ETF

What is the Vanguard Total Stock Market ETF (VTI)?

The Vanguard Total Stock Market ETF (VTI) tracks the performance of the CRSP US Total Market Index. The fund has returned 510% since its inception in 2001 (as of February 11, 2024). The fund is a market capitalization-weighted index that measures the entire investable U.S. stock market. It includes small, mid and large capitalization companies. The fund is passively managed and uses an index sampling strategy.

Key takeaways

  • The Vanguard Total Stock Market ETF is a well-diversified exchange-traded fund (ETF) that holds over 3,700 stocks.
  • The ETF's top sector is technology, with a weighting of 27.7%, while Microsoft, Apple and Alphabet are its top three holdings, accounting for 13.2% of the ETF.
  • It has a low expense ratio (0.03%) and tracks the overall stock market very closely (beta of 1), making it an inexpensive way to gain exposure to the US stock market.

Understanding the Vanguard Total Stock Market ETF (VTI)

The Vanguard Total Stock Market ETF is an open-end fund issued by Vanguard and advised by the Vanguard Equity Investment Group. The fund is a passive index fund and therefore has a remarkably low expense ratio of 0.03%. The fund has a relatively low turnover rate of 8%, meaning the transaction costs of changing the fund's holdings are limited. The expense ratio does not include any commissions or brokerage fees. The low expense ratio is beneficial for long-term investors in the fund.

Shares are trading around $248 as of February 2024. The fund has an average daily volume of 2.4 million shares, indicating that there is plenty of liquidity in the ETF. VTI shares are traded on the New York Stock Exchange. Investors can purchase stocks commission-free through Vanguard Brokerage Services.

Vanguard Total Stock Market ETF (VTI) Holdings

The fund has more than 3,750 stocks in its portfolio, a huge amount for an ETF. The median market capitalization of the fund's holdings is $149.3 billion. The portfolio's weighted average price-to-earnings (P/E) ratio is 22.9, with a price-to-earnings (P/E) ratio of 3.9. The P/E ratio takes the current market value of companies' shares divided by earnings per share (EPS). The P/B ratio takes the stock price divided by total liabilities minus intangible assets and liabilities.

The technology sector has the highest weighting in the fund at 31%, followed by the consumer discretionary sector with a weighting of 14.5%. The industrial maintenance sector comes in third position with a weighting of 13.1%.

Apple (AAPL) is the largest stock with a weighting of 6.1%, followed by Microsoft (MSFT) with a weighting of 6.0%. Amazon (AMZN) is the third largest stock with a 3.0% weighting, while Nvidia (NVDA) is fourth with a 3.2% weighting. The top 10 holdings represented a total of 26.4% of the fund's holdings (as of February 11, 2024).

$1.5 trillion

Total assets of the Vanguard Total Stock Market ETF (VTI), as of February 11, 2024.

Benefits of the Vanguard Total Stock Market ETF (VTI)

VTI is an extremely diversified fund. Its large number of securities reflects the entire universe of investable US securities. The fund is exposed to small cap stocks which may be more volatile than mid or large cap stocks. The fund has a beta of 1.0 relative to the broader market. The fund is exposed to systematic risk, which is the risk inherent in the entire market. A greater slowdown in the U.S. economy or the global economy is likely to impact the value of the fund.

The fund has performed well recently following the greater rise in stocks. As of February 2024, VTI had a one-year return of 19.2% and a five-year return of 13.4%. This ETF reflects the broader universe of U.S. stocks in a single, low-cost fund. Investors should include other assets that are not as correlated with the stock market so they can balance their portfolios. Consistent with the principles of modern portfolio theory, holding uncorrelated assets can help minimize portfolio risk.

What is the average annual return of VTI?

The Vanguard Total Stock Market ETF (VTI) has returned an average of 8.3% annually since its inception in 2001.

How much should I invest in VTI?

Generally, the minimum investment for an exchange-traded fund is one share, which for VTI costs $248 as of February 2024. However, some brokers may allow investors to purchase fractional shares.

Does VTI pay a dividend?

Yes, VTI pays a dividend every three months, with an annual yield of 1.38%. The last dividend payment was paid on December 21, 2023, with a dividend of $1 per share.

The essential

The Vanguard Total Stock Market ETF is a popular way to save for retirement or long-term growth. The fund represents a snapshot of the stock market, allowing investors to track the gains of the market as a whole rather than investing in individual stocks. Like many other index ETFs, it has an extremely low expense ratio because its management fees are lower than actively managed funds.

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