Connect with us

Hi, what are you looking for?

Economy

1 Vanguard ETF That Can Serve as a Complete Stock Portfolio

Investing in the stock market can be daunting, especially when it involves picking individual stocks. It’s a process that demands extensive research and continuous monitoring but also carries significant risk.

For those looking to bypass these complexities, Vanguard offers a compelling solution with its range of 86 exchange-traded funds (ETFs). Among them, the Vanguard Total Stock Market ETF (VTI -0.07%) stands out as a one-stop shop for investors seeking a diversified stock portfolio.

Why choose the Vanguard Total Stock Market ETF?

This particular ETF is designed to give investors exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. Its broad diversification and low expense ratio make it an attractive option for both novice and experienced investors.

It tracks the performance of the CRSP US Total Market index. Composed of 3,656 individual stocks, this index represents a true tour de force in terms of diversification.

Expense ratio

The Vanguard Total Stock Market ETF sports an incredibly low expense ratio of 0.03%, significantly lower than the category average of 0.79%. This means more of your investment goes toward growing your capital rather than paying fund management fees.

10-year return average

Over the past decade, this ETF has delivered an average annual return of 11.77%. While the Vanguard S&P 500 ETF outperformed it over this period, it didn’t do so by a wide margin (see graph below).

VTI Total Return Level data by YCharts.

This fact demonstrates the ETF’s ability to provide robust returns while offering comprehensive exposure to the stock market.

Risk profile

The Vanguard Total Stock Market ETF carries a risk level of 4 on a scale of 1 to 5, with 5 being the highest risk. This metric indicates a higher risk potential, compared to lower-risk investments such as bonds and other fixed-income instruments. But it also offers the possibility for higher returns, which is typical for stock market investments.

Top five holdings and their weights

The top five holdings in this ETF’s portfolio are some of the largest and most well-known companies on the planet that include:

Microsoft — 6.12%Apple — 4.93%Nvidia — 4.20%Amazon — 3.30%Meta Platforms — 2.09%

These holdings underscore the Vanguard Total Stock Market ETF’s focus on technology and innovation, areas that have historically driven an outsized portion of the market’s growth.

Sector weightings

The Vanguard Total Stock Market ETF’s sector weightings are reflective of the broader market, with technology (32.1%), consumer discretionary (14.2%), industrials (13.1%), healthcare (11.9%), and financials (11%) being the most heavily weighted sectors. This broad allocation aligns with the fund’s goal of a balanced approach to value creation and risk management.

Final thoughts

This ETF screens as an excellent choice for investors who prefer a hands-off approach to stock market investing. Its low costs, broad diversification, and solid track record of returns make it a suitable core holding that can serve as a complete stock portfolio.

Whether you’re starting out or just looking to simplify your investment strategy, the Vanguard Total Stock Market ETF offers a straightforward path to participating in the growth potential of the U.S. stock market. More broadly, investing in low-cost ETFs like this one can help mitigate the risks associated with individual stock selection while still providing the opportunity for healthy levels of capital growth. It’s a strategy that aligns with Vanguard’s philosophy of making high-quality investment options accessible to all in a low-cost manner.

This post appeared first on fool.com

You May Also Like

Investing

Newmont (NYSE: NEM) reported mixed financial results even as the price of gold approached its all-time high. In all, the company’s earnings per share...

Investing

Fisker (NYSE: FSR) stock price has been one of the best-performing electric vehicle (EV) stocks this week even as Tesla slumped. The shares jumped...

Investing

NatWest (LON: NWG) share price rose sharply, helped by the strong results from Barclays. The stock jumped to a high of 274.8p, which was...

Investing

The Fox Corporation (NASDAQ: FOX) stock price has been under pressure as investors come to terms with the abrupt firing of Tucker Carlson. The...




Disclaimer: Oldamericanbroker.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the-company.


Copyright © 2024 Oldamericanbroker.com