For investors seeking diversified exposure to the U.S. stock market, the Vanguard Total Stock Market Index Fund (VTSAX) and its ETF counterpart (VTI) are popular choices.
However, several other funds offer similar broad market coverage with competitive expense ratios and strong historical performance. Here are five alternatives to consider:
1. Fidelity ZERO Total Market Index (FNILX): This fund stands out with its truly zero expense ratio, meaning investors pay nothing annually to own it. While it technically tracks the Fidelity U.S. Large Cap Index rather than the S&P 500, the difference is minimal. It’s a great option for investors looking for a core holding with no costs.
2. Schwab U.S. Broad Market ETF (SCHB): With an expense ratio of just 0.03%, SCHB aims to track the Dow Jones U.S. Broad Stock Market Index, having companies across the market-cap spectrum. Its historical performance has been strong, making it a solid contender.
3. iShares Core S&P Total U.S. Stock Market ETF (ITOT): This ETF also has a very low expense ratio of 0.03% and tries to compete with the performance of the S&P Total Market Index, holding a large number of securities.
4. Vanguard S&P 500 ETF (VOO): While not a total stock market fund, VOO provides exposure to the 500 largest U.S. companies, representing a significant portion of the overall market. Its expense ratio is a rock-bottom 0.03%, and it’s backed by Vanguard’s reputation for low-cost investing.
5. Invesco QQQ Trust ETF (QQQ): Focusing on growth and technology companies, QQQ tracks the Nasdaq-100 Index which includes the largest non-financial companies listed on the Nasdaq. Although it is less diversified than a total stock market fund it has a solid history.
These funds all offer different approaches to broad market investing, each with its own nuances. Investors should carefully consider their individual investment goals, risk tolerance, and preferred investment style when selecting the fund that’s right for them.
Important Disclaimer: This is not a finance advise.
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