Categories: Exchange Traded Funds (ETFs)U.S. Investing

This Bargain ETF Covers the Entire Market

Following last week’s introduction to exchange-traded fund (ETF) provider Vanguard and its low-expense-ratio funds, we turn our attention today to an offering with a 0.05% expense ratio, Vanguard Total Stock Market ETF (VTI).

VTI is the second-largest ETF among Vanguard’s offerings, and its highly cost-effective expense ratio is noted by Morningstar Inc. to be 95% less than the average expense ratio of funds of its type.

This ETF, as its name indicates, rises and falls in conjunction with the overall stock market. To achieve its results, VTI samples an index representing the investable U.S. stock market, including large-, mid-, small- and micro-cap stocks. This approach gives VTI a broadly diversified selection of securities that approximates the key characteristics of the full index.

VTI has risen 0.50% this year, though it was doing better before a recent decline, as seen in the chart below. It also offers investors a dividend yield of 1.78%.

As a reflection of the overall market, VTI has holdings in nearly every major sector, though its largest allocations are to technology, 17.40%; financial services, 14.30%; and healthcare, 13.56%. This fund’s top 10 holdings possess 14.14% of its total assets, with this list composed of recognizable names, including Apple Inc. (AAPL), 2.78%; Exxon Mobil Corporation (XOM), 1.92%; Microsoft Corporation (MSFT), 1.52%; Johnson & Johnson (JNJ), 1.32%; and Wells Fargo & Company (WFC), 1.22%.

Many providers offer ETFs which track the progress of the overall stock market, but VTI, similar to all Vanguard funds, stands out due to its relatively low expense ratio. If low management fees appeal to you, you may want to keep in mind Vanguard Total Stock Market ETF (VTI).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about Vanguard, the low-cost ETF provider. I also invite you to comment in the space provided below.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/