If You Like Money, This ETF Could Be What You're Looking For
Key Points
Vanguard Total Stock Market (VTI) excedes the criteria for an outstanding fund.
Like some other Vanguard ETFs, VTI closely follows an index with a long history of success.
VTI is great for nervous investors because it diversifies your portfolio and spreads the risk of a market downturn.
- 10 stocks we like better than Vanguard Total Stock Market ETF ›
Whether you're an experienced investor or just getting started, your first goal is to protect your money as it grows. One way to do that is by investing in an exchange-traded fund (ETF). An ETF is a type of investment fund that holds a collection of assets, including stocks, bonds, and commodities. By holding a variety of assets, an ETF diversifies your portfolio and helps spread risk when the market is down.
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Vanguard Total Stock Market
Not all ETFs are created equal, and frankly, some are better than others. Vanguard Total Stock Market (NYSEMKT: VTI) meets the criteria for an ideal fund. Among the characteristics identifying a strong ETF are a clear investment approach, low costs, and strong historical performance. Here's how VTI stacks up in those areas:
Clear investment approach
The VTI ETF uses a clear and straightforward investment approach. It tracks the CRSP US Total Market Index, which weights all investable U.S. stocks by market cap. It's no surprise that corporate powerhouses like Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla, Meta Platforms, and Berkshire Hathaway rise to the top.
As those big-name corporations increase in value, so do VTI and your diversified portfolio.
Low costs
VTI -- like all Vanguard ETFs -- is famous for its low expense ratio. Unlike with an employer-sponsored retirement plan, you don't have to dig for how much you're paying in fees. It's 0.06%, or just $6 annually for an investment of $10,000.
If you're curious about how Vanguard gets away with charging so little in fees, here are three reasons:
- Unique ownership setup: Vanguard is owned by its funds, and those funds are owned by investors. This means there's no pressure to maximize profits to please outside shareholders.
- Pure numbers: The company has so many assets under management that it can pass on discounted expense ratios to investors.
- Low marketing fees: Vanguard rarely uses an external sales or marketing force. Instead, it depends on word of mouth to attract new investors.
Historical performance
Despite the financial crisis of 2007 to 2009, a global pandemic, and various geopolitical events, VTI has managed to end most years on a high note. Here's a breakdown of the fund's performance since 2015:
|
Year |
Annual Return |
|---|---|
|
2025 |
17.10% |
|
2024 |
23.81% |
|
2023 |
26.05% |
|
2022 |
-19.51% |
|
2021 |
25.67% |
|
2020 |
21.03% |
|
2019 |
30.67% |
|
2018 |
-5.21% |
|
2017 |
21.21% |
|
2016 |
12.83% |
|
2015 |
0.36% |
Source: Yahoo! Finance
If nothing else, despite all that has happened over the past decade, this table indicates how well VTI has handled financial turbulence.
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Dana George has positions in Amazon and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.
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