The S&P 500 Has Returned About 11% Annually Since 1958. Here's the ETF I'd Trust for the Next 30 Years.

In 1996, these were the S&P 500's (SNPINDEX: ^GSPC) largest holdings by market cap:

1. Coca-Cola: $130.6 billion
2. ExxonMobil: $121.7 billion
3. Intel: $107.6 billion
4. Microsoft: $99.4 billion
5. General Electric: $97.4 billion
6. Merck: $86.4 billion
7. International Business Machines: $73.5 billion
8. Procter & Gamble: $72.5 billion
9. Johnson & Johnson: $66.3 billion
10. Walmart: $52.2 billion

30 years later, all of these companies remain well-known names in the current economy. But it's fair to say that they don't at all resemble what the index looks like today. Microsoft is the only "Magnificent 7" stock still in the Top 10. Apple was in the midst of a corporate crisis until Steve Jobs eventually returned to the company. Nvidia, Amazon, Meta Platforms, Alphabet, and Tesla weren't even publicly traded companies (or didn't exist) back then.

Economies evolve over time, sometimes significantly. When investing for the long term, you can try to pick stocks that will survive and thrive. Or you can buy an ETF that tracks the economy and provides broad exposure. That's why the Vanguard Total Stock Market ETF (NYSEMKT: VTI) is my choice for a core holding for a multidecade portfolio.

Image source: Getty Images.

VTI doesn't need to pick the next big winners

Since 1958, the S&P 500 has returned an average of 11% per year. But as demonstrated just now, it's a rapidly changing group of stocks that is driving those returns over the year.

That's what makes the Vanguard Total Stock Market ETF so compelling. It doesn't need to try to identify and pick individual winners. It will increase its exposure to them naturally over time as the market caps of these companies grow.

If you had owned the S&P 500's top 10 holdings in 1996 and held them for the next 30 years, you probably would have still done fairly well. But you would have missed out on the emerging tech names that grew to dominate the market and economy over that time.

Plus, the Vanguard Total Stock Market ETF owns the smaller companies that often turn into bigger companies down the road. By investing in the S&P 500, you limit yourself to just the large companies that have already established themselves. Adding small-cap and mid-caps to the mix potentially gets you in earlier on the next decade's leaders.

That's why I'd own this ETF and have it act as the core of my portfolio over the next several decades. Its diversification, low cost, and ability to change over time make it an ideal long-term holding.

David Dierking has positions in Apple and Vanguard Morningstar Total Stock Market ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, GE Aerospace, Intel, International Business Machines, Merck, Meta Platforms, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.