This is a Fund That Spans All American Stocks

Townhall.com ^ | February 3, 2015 | Doug Fabian

[Kaslin]

This featured fund is broader than some of those covered previously in our current series about the world’s largest exchange-traded funds (ETFs). The market’s fourth-largest ETF is simply one to invest in when you think times are good and things are looking up across the board in the United States: Vanguard Total Stock Market ETF (VTI).

VTI is less discriminatory than the other U.S. funds we have examined, since it tracks an index that includes nearly every stock in the U.S. market that is open to investment. The fund’s holdings run the gamut from large to small and value- to growth-oriented. It only seems reasonable that this fund would have as low an expense ratio (0.05%) as it does, which makes it an inexpensive way to invest in a basket so broad that most investors could not emulate it with their own limited assets, especially since the fund is weighted more heavily towards larger companies.

U.S. markets in general performed quite well in 2014, as evidenced by VTI’s 10.51% gain for the year. Investing trends of the past year are reflected in the graph seen below. The 2014 September-October slump is clearly visible, as are all the other sweeping moves in the U.S. market last year. VTI holds $50.5 billion in assets managed. The fund pays a modest 1.76% dividend yield.

As VTI is a compendium of the U.S. stock market, its holdings essentially reflect the market. The largest industries are technology, 17.46%; financial services, 14.87%; and healthcare, 14.34%. VTI’s largest positions make up 13.96% of the portfolio. These positions include Apple Inc. (AAPL), 2.85%; Exxon Mobil Corporation (XOM), 1.72%; Microsoft Corporation (MSFT), 1.52%; Johnson & Johnson (JNJ), 1.29%; and Wells Fargo & Company (WFC), 1.25%.

Many investors interested in profiting as the entire market increases in value choose Vanguard Total Stock Market ETF (VTI). It could be an option for your portfolio as well.

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 the biggest international ETF.

[ConstantSkeptic]

So far I’ve stuck to index mutual funds instead of ETFs. I need to do more research to see the advantages / disadvantages of each.

That said, if you want to buy a comparable total market index mutual fund, Vanguard’s would be their Vanguard Total Stock Market Index Admiral Shares (VTSAX). If your investments are at Fidelity, check out Fidelity’s Spartan Total Market Index Fund (FSTVX).

Both funds require an initial $10,000 investment. They have comparable funds which require smaller investments but have slightly higher expenses.

[RainMan]

Or, you could just by spider stocks ... which are nothing more than index funds, and don’t require anything close to a $10K minimum investment. In my MBA Finance class we studied investments in depth, and spiders are a way to get the highest return with the lowest risk. No, they will not outperform certain individual stocks, but they also will not underperform individual stocks. If you are looking for a safe investment, those are the way to go.

http://www.investopedia.com/terms/s/spiders.asp

[Prov1322]

So far I’ve stuck to index mutual funds instead of ETFs.

I have no money any longer in either camp (I am strictly a Futures Trader these days...) BUT, if I did want to go with either of the above, ETFs are clearly the way to go these days.

You can go either long or short (for most things...) and the big advantage is the ability to buy/sell at the market...with Mutual Funds, you cannot close out until the trading day is closed and you are settled at whatever that price may be.

A caveat about double/triple leveraged ETFs...DON'T unless you fully understand how they are calculated.