Vanguard Total Stock Market ETF (VTI)

NetscribeETF (94.05) Submitted: 3/26/07 5:13 AM : Start Price: $71.55 VTI Score: -0.83

With a $7.5 billion market capitalization and an exposure to the performance of 3,735 securities, closely emulating the MSCI US Broad Market Index, this ETF employs a passively managed approach. The ETF is constituted with a broad mix of value and growth stocks across the large, medium and small market capitalizations.


Financial services sectors occupies a major 22.5% share on the ETF followed by 15.3% of the IT sector while Healthcare, Consumer discretionary and Industrials hold 11%-12% each among others. Being a broad based ETF, the top ten companies make up for merely 15.28% share with Exxon Mobil holding 2.57% share, GE sharing 2.35% and Citigroup, Bank of America & Microsoft each holding 1.5%-1.75% each, among others.


Given the broad base of the ETF, it more or less emulates the movement of the US economy as a whole. As it owns more small caps in numbers, it may look a bit sluggish in the future if small stocks surrender the market leadership that they've enjoyed in recent past. This could turn out to be a major risk as small caps are not as strong to stand any headwinds in the economic scenario.


Despite an average 42% return in the past three years, the ETF managed to generate only 12.4% return over the past one year, which shows the signs of slowing economic growth. Though its expense ratio stands at an ultra-low of 0.07%, which makes it not only one of the lowest-cost ETFs in the large-blend category, but also one of the lowest-cost ETFs in existence, the economic downturn makes the fund a bit less investor friendly. Thus VTI turns out to be a less attractive investment proposition in the near term.

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