$VTI (Vanguard Total US Stock Market) ETF

A breakdown of one of my favorite ETFs. The index fund version of this is $VTSAX (often in 401k and IRA funds). It is my largest ETF holding.

Breaking down the 3 criteria we discussed earlier this week — the fund owner, the expense ratio, and the top 10 holdings….(read more)

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VTI, or Vanguard Total US Stock Market, is an exchange traded fund (ETF) that aims to track the performance of the CRSP US Total Market Index. This index represents the entire spectrum of the US stock market, including large, mid, small, and microcap companies. VTI is designed to provide investors with broad exposure to the US stock market, making it a popular choice for those seeking diversified equity exposure in their investment portfolios.

The breakdown of VTI consists of holdings in over 3,600 individual stocks, covering a wide range of industries and sectors. This diversification helps to reduce the risks associated with investing in individual stocks, as the performance of one stock is less likely to significantly impact the overall performance of the fund.

In terms of market capitalization, VTI includes stocks of varying sizes, with the majority of the holdings being in large and mid-cap companies. This allows investors to gain exposure to both established, well-known companies as well as smaller, potentially high-growth companies.

One of the key advantages of investing in VTI is its low expense ratio, which is the annual fee that the fund charges its investors. Vanguard is known for offering some of the lowest expense ratios in the industry, making VTI a cost-effective way to gain exposure to the US stock market.

Furthermore, VTI is known for its tax efficiency, as it typically distributes minimal capital gains, which can result in lower tax liabilities for investors. This is especially beneficial for investors holding VTI in taxable accounts.

Another important aspect of VTI is its passive management style. This means that the fund aims to replicate the performance of its underlying index rather than actively selecting individual stocks. As a result, VTI tends to have lower portfolio turnover and fewer transaction costs compared to actively managed funds, which can lead to potential cost savings for investors.

It’s also worth noting that VTI is a highly liquid investment, as it is traded on major stock exchanges like the NYSE Arca. This allows investors to easily buy and sell shares of VTI at market prices throughout the trading day.

In summary, VTI is a popular ETF that offers broad exposure to the US stock market through its diversified holdings of over 3,600 individual stocks. With its low expense ratio, tax efficiency, and passive management style, VTI provides investors with a cost-effective and efficient way to gain exposure to the US equity market. Whether used as a core holding or as a part of a diversified investment strategy, VTI can be a valuable addition to an investor’s portfolio.