This ETF offers broad exposure to the U.S. equity market, investing in thousands of different securities across all sectors. That makes VTI an appealing option for investors looking to simplify their portfolios and minimize rebalancing obligations, as this fund can serve as a core holding of a long-term portfolio. VTI can potentially be useful as a tool for establishing quick exposure to risky assets, though most shorter-term traders with that objective will gravitate towards products such as SPY instead. One of the most attractive aspects of VTI, in addition to the extremely broad base of holdings and balance of exposure, is the price. This ETF is one of the cheapest products available, and the ability to trade commission free within a Vanguard account further increases the appeal to cost-conscious investors. For those looking to minimize fees, VTI will fit right into a portfolio. One attribute worth noting, however, is the tilt towards large caps. While VTI includes companies of all sizes, the allocations to mid caps and small caps are not significant. Those seeking more balanced exposure to U.S. equities may want to use VTI alongside more targeted products focusing on smaller companies.
The adjacent table shows a Realtime Rating for several different metrics, including liquidity, expenses, performance, volatility, dividend, concentration of holdings in addition to an overall rating. The "A+ Metric Rated ETF" field, available to ETFdb Pro members, highlights the best rated ETF in the All Cap Equities category for each metric. To view information on how the ETFdb Realtime Ratings work, click here.View the Category Report
The following tables and charts contain in-depth metrics for this ETF and compare it to similar peer ETFs within its ETFdb Category.
This section compares how balanced and deep this ETF is relative to the peer group ETFdb Category.
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This section compares the cost efficiency of this ETF to peers in the same ETFdb Category.
There are 13 other ETFs in the All Cap Equities ETFdb Category that are also eligible for commission free trading:
This section shows how this ETF has performed relative to its peer group ETFdb Category.
The following charts can be customized to display historical performance in a number of different formats, including line charts, bar charts, and candlesticks. Time periods can be adjusted to increase or decrease the period shown, ranging from five minutes to several months.
The following chart also includes the option to compare the performance of VTI relative to other ETFs and benchmarks or to include indicators such as Bollinger Bands, relative strength, and moving averages.
This section shows how the volatility of this ETF compares to the peer group ETFdb Category.
Published March 1, 2016
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The Vanguard Total Stock Market ETF (VTI ) employs a passive management or indexing investment approach designed to track the performance of the of the MSCI U.S. Broad Market Index. The index represents 99.5% or more of the total market capitalization of all United States common stocks traded on the New York and American Stock Exchanges and the Nasdaq over-the-counter market. The ETF typically holds the largest 1,200 to 1,300 stocks in its target index, covering nearly 95% of the index’s total market cap as well as a representative sample of the remaining stocks. This year, the ETF is down 2.06%,which is in line with the MSCI U.S. BMI.
In terms of historical performance, VTI has performed in line with the MSCI U.S. BMI. In percentage terms, the fund is up 55.6% over five years, which is also in line with the index. Over the last one year, however, VTI is down 5.36%. The fund is heavily exposed to corporate earnings and the global economy, which is evident from the constituents of the index it tracks. Significant headwinds in the form of slowing demand in China, rising interest rates in the U.S., a strong dollar, and a negative interest rate policy adopted by the ECB and the Japanese central bank have all been a drag on worldwide corporate earnings.
In addition, companies in the energy and commodities sectors, which together account for over 10% of the MSCI U.S. Broad Market Index, have seen massive deleveraging in the face of historic lows for oil, copper and other metals. This has meant that only select companies in the technology, consumer cyclicals/staples, and telecom sectors have performed better than the overall market. Recently, however, as oil has come significantly off its lows and with the commodity sector no longer capitulating, there have been some positive events in sectors that have been laggards in the broader market. This has helped VTI and its tracking index come off of YTD lows of 12% to 2.06% as of this writing.
The macro picture for VTI is positive. There are several points worth considering. It appears that the energy and commodities sectors have already seen the worst, with oil rising from historic lows in the mid-20s to the high 30s. Technology names such as Facebook (FB) and Google (GOOG) continue to do well and outperform their peers in earnings. Technology companies constitute more than 15% of the MSCI U.S. Broad Market Index. Further, dollar-sensitive names such as Microsoft (MSFT) and Apple (AAPL) have outperformed with strong earnings, despite the strength in the greenback. Health care, which accounts for just over 10% of the MSCI U.S. BMI, has performed in line with market expectations as well and will continue to do well this election year. Finally, financials constitute over 15% of the index; headline risks from the Fed seem to be diminishing and monetary policy is on the journey towards a new normal. Even so, volatility in the bond markets and an extremely tough regulatory environment will challenge both existing and new income streams.
That takes us to VTI’s financial ratios. VTI is exceptionally large with $57.5 billion in assets under management and a yield of 2.10%. VTI is close to its all-time high of $110.90, trading as of this writing at $103.19. Its all-time low, hit in 2009 during the financial crisis, and the historic lows of March 2009, is $34.11. VTI’s expense ratio is 0.05%, which is significantly lower than other funds in its category. The fund has a turnover ratio of 3%.
A fundamental downside risk to an otherwise healthy outlook for VTI is that it tracks the MSCI U.S. Broad Market Index, making it extremely sensitive to headline risks, especially those from emerging markets such as China. In addition, since VTI tracks such as a broad basket of stocks, it also relies heavily on corporate earnings and monetary policy movements. This means that the strength of the greenback vis-à-vis other currencies and central bank policy moves in and out of the U.S. could be a negative factor in the short term, given that technology, consumer cyclicals and financials constitute more than 45% of VTI’s holdings.
I believe there are other opportunities in specific companies to play the market, but for investors wanting broad exposure, or for those wanting to park their money and have safe market exposure, VTI is a great option. Given the recent rally, I believe it would be prudent to start accumulating VTI at lower levels of between $95 to $98. I believe VTI, which trades right now for $103.20, is a Weak Buy with a price target of $106.50.
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