Vanguard is one of the world’s largest investment management companies, with over $7 trillion in assets under management. One of the most popular investment products offered by Vanguard is the Vanguard Total Stock Market ETF (VTI). In this article, we will take an in-depth look at Vanguard’s VTI ETF and its benchmark index.
What is Vanguard’s VTI ETF?
Vanguard’s VTI ETF is an index-based fund that seeks to track the performance of the CRSP US Total Market Index. The ETF invests in a diversified portfolio of U.S. stocks, including large-cap, mid-cap, and small-cap companies. The VTI ETF was introduced in 2001 and has since grown to become one of the most popular ETFs in the market.
What is the CRSP US Total Market Index?
The CRSP US Total Market Index is a benchmark index that covers nearly all U.S. stocks, including large-cap, mid-cap, and small-cap companies. The index is designed to be a comprehensive measure of the U.S. stock market’s performance. The CRSP US Total Market Index is market-cap weighted, which means that the index’s performance is influenced more by the larger companies in the index.
What are the advantages of investing in Vanguard’s VTI ETF?
There are several advantages to investing in Vanguard’s VTI ETF, including:
- Diversification – VTI offers investors exposure to a broad range of U.S. stocks, which helps to reduce portfolio risk.
- Low Expense Ratio – VTI has a low expense ratio, making it an affordable option for investors.
- Liquidity – As one of the most popular ETFs on the market, VTI is highly liquid, meaning that investors can easily buy and sell shares.
- Tax Efficiency – VTI has a low turnover rate, which can help to minimize the impact of taxes on investors’ returns.
How has Vanguard’s VTI ETF performed?
Over the past 10 years, Vanguard’s VTI ETF has delivered an average annual return of approximately 14.6%, which has outperformed many actively managed funds. However, it is important to note that past performance is not a guarantee of future results, and investors should always conduct thorough research before making investment decisions.
Vanguard’s VTI ETF and its benchmark index, the CRSP US Total Market Index, are attractive investment options for investors who seek exposure to a diverse range of U.S. stocks. With its low expense ratio, high liquidity, and tax efficiency, VTI is a cost-effective and convenient investment option. However, as with any investment, investors should always conduct thorough research and consult with a financial advisor before making investment decisions.