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

How to Own the S&P 500 in The Cheapest Way

U.S. flag in shape of the United States

The diversity of investment offerings from Vanguard, a low-expense-ratio exchange-traded fund (ETF) provider, is showcased in this week’s ETF Talk that features Vanguard S&P 500 ETF (VOO), an S&P 500-based ETF.

VOO is one of Vanguard’s most popular funds; it held $21.8 billion in assets under management at the end of the third quarter. This fund’s expense ratio of just 0.05% is 95% lower than the average for funds with similar holdings.

VOO tracks the performance of an index that measures the investment return of large-capitalization stocks. It attempts to replicate the results of the S&P 500, holding each stock in approximately the same proportion as its weighting in the index.

Like the S&P 500, VOO has performed strongly this year by rising 10.71% so far. VOO also offers investors a bit of income with a 1.83% dividend yield.

VOO’s top 10 largest holdings comprise 17.63% of its assets. Its five largest positions are Apple Inc. (AAPL), 3.43%; Exxon Mobil Corp. (XOM), 2.28%; Microsoft Corp. (MSFT), 2.17%; Johnson & Johnson (JNJ), 1.71%; and the General Electric Company (GE), 1.46%.

The S&P 500 is having a very strong year, so if you want to go long in the large-cap segment of the domestic equity market, consider putting your money to work in the low-expense-ratio Vanguard S&P 500 ETF (VOO).

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’s bond ETF. 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/