Investing in the stock market can be intimidating, especially when it comes to picking individual stocks. This is a process that requires extensive research and ongoing monitoring, but also carries significant risks.
For those looking to get around these complexities, Vanguard offers an interesting solution with its lineup of 86 exchange-traded funds (ETFs). Among them, the Vanguard Total Stock Market ETF (NYSEMKT:VTI) stands out as a one-stop shop for investors looking for a diversified stock portfolio.
Why choose the Vanguard Total Stock Market ETF?
This particular ETF is designed to provide investors with exposure to the entire U.S. stock 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 new and experienced investors.
It tracks the performance of Total CRSP market in the United States hint. Made up of 3,656 individual stocks, this index represents a real tour de force in terms of diversification.
Spending rate
Vanguard Total Stock Market ETF sports an incredibly low rate spending rate of 0.03%, significantly lower than the category average of 0.79%. This means that more of your investment goes into growing your capital rather than paying fund management fees.
Average return over 10 years
Over the past decade, this ETF has generated an average annual return of 11.77%. While the Vanguard S&P 500 ETF outperformed over this period, it did not do so by far (see graph below).
This fact demonstrates the ETF’s ability to provide robust returns while providing 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 measure indicates higher risk potential, compared to lower-risk investments such as bonds and other fixed-income instruments. But it also offers the possibility of obtaining higher returns, which is typical of stock market investments.
Top five stocks and their weightings
The top five holdings in this ETF’s portfolio are some of the largest and best-known companies on the planet, including:
Microsoft — 6.12%
Apple — 4.93%
Nvidia — 4.20%
Amazon — 3.30%
Metaplatforms — 2.09%
These holdings highlight the Vanguard Total Stock Market ETF’s focus on technology and innovation, areas that have historically driven a considerable portion of the market’s growth.
Sector weightings
The Vanguard Total Stock Market ETF’s sector weightings reflect the overall market, technology (32.1%), consumer discretionary (14.2%), industrials (13.1%), healthcare ( 11.9%) and finance (11%) being the most important. heavily weighted sectors. This broad allocation aligns with the fund’s objective of a balanced approach to value creation and risk management.
Final Thoughts
This ETF is a great choice for investors who prefer a hands-off approach to stock investing. Its low costs, broad diversification, and strong performance history make it a suitable core stock that can serve as a complete stock portfolio.
Whether you’re just starting out or simply looking to simplify your investing strategy, the Vanguard Total Stock Market ETF provides a simple path to participate in the growth potential of the U.S. stock market. More broadly, investing in low-cost ETFs like this can help mitigate the risks associated with individual security selection while still providing the opportunity for healthy levels of capital growth. This is a strategy that aligns with Vanguard’s philosophy of making high-quality, low-cost investment options available to everyone.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. George Budwell holds positions in Apple and Vanguard S&P 500 ETF. The Motley Fool holds positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Vanguard Index Funds-Vanguard Total Stock Market ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 Vanguard ETF That Can Serve as a Complete Stock Portfolio was originally published by The Motley Fool
