US stock market fund with 100% exposure to all the index shares | The Financial Express

US stock market fund with 100% exposure to all the index shares

ETFs are low-cost investments allowing investors to purchase a variety of stocks from the same index that are in different industries.

US stock market fund with 100% exposure to all the index shares
While the returns will be in line with the market, the possibility of producing an alpha may not be there in ETFs.

I want to start investing in the US stock market, but where to start? – If you are facing a similar situation, here’s a fund that you may consider to start your investment journey on Wall Street. Nasdaq 100, Dow 30, Russell 2000, or S&P 500 stocks, you get exposure to over 3900 stocks of these indices in one single investment.

Yes, we are talking about Vanguard Total Stock Market ETF (VTI), which gives you exposure to the entire US equity market, including small, mid, and large-cap growth and value stocks. Many investors also refer to the Vanguard complete world stock ETF or the Vanguard total stock market ETF as the VTI stock.

Also Read: 10 exchange-traded funds to take exposure in US stock market

If you are a beginner and looking to invest in the US stock market, there are several stocks with varying market capitalization and from different industries to choose from. However, selection and investing in the right US stock may not be as easy as it looks. Vanguard Total Stock Market ETF (VTI) is renowned for its affordability and diversification across 11 important US economic sectors. The expense ratio as of April 29, 2022, was 0.03%; the lower the ratio, the better for investors.

Also Read: US stock market offers unique opportunities for investors to diversify their portfolio

The Vanguard Total Stock Market ETF (VTI) employs an index-sampling, passive management method to replicate the performance of the US Total Market Index. As of November 23, VTI is currently trading at around $201, lower by nearly 15 % in YTD, almost similar dip as seen in S&P 500 but better than the Nasdaq 100 fall of 27% YTD.

The performance of VTI has been close to its benchmark over longer periods. The 3-year, 5-year and 10-year return as on October 31, 2022, has been 9.66%, 9.81%, and 12.40 % respectively.

The Vanguard Total Stock Market ETF is a low-cost option for investors who want broad exposure to the U.S. stock market and are ready to embrace the volatility that comes with stock market investment. The five major industries for VTI are technology, consumer discretionary, industrials, health care, and financials.

As of October 31, 2021, the top 10 largest holdings of Vanguard Total Stock Market ETF (VTI) total about 22.08% of the total net assets of the fund and include, Apple Inc., Microsoft Corp., Alphabet, Amazon.com Inc., Facebook Inc., Tesla Inc, Berkshire Hathaway Inc., NVIDIA Corp., JPMorgan Chase & Co, and Johnson & Johnson.

Vanguard Total Stock Market ETF (VTI) is known for its low-cost and the diversification that it provides across 11 major sectors in the US economy. As on April 29, 2022, the expense ratio was 0.03%, the lower the ratio the better it is for the investors.

ETFs are inexpensive ways to purchase a variety of equities from the same index that are in different industries. VTI exposes investors to the whole range of US stocks at once. While the returns will be in line with the market, the possibility of producing an alpha may not be there in ETFs, including VTI, because of their greater level of diversification. For a far more consistent return, VTI may be considered to be included in your long-term portfolio of US stocks.

Disclaimer: The investing decision in these or any other stock should be taken on your own after carefully evaluating the business and other fundamentals of the company or after consulting one’s financial advisor. It is not a recommendation to buy, hold or sell in any of the stocks. Financial Express Online does not bear any responsibility for their investment advice.

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First published on: 27-11-2022 at 10:57 IST