Lester Freeman
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is a mutual fund that offers investors exposure to the entire U.S. stock market. With holdings in companies like Apple, Microsoft, and Amazon, VTSAX seeks to replicate the performance of the total U.S. stock market. The fund has a low expense ratio of 0.04% and a strong historical performance, making it an attractive option for investors. In this article, we will discuss how to use Vanguard to invest in VTSAX, including the steps to buy and sell the fund, as well as the potential benefits and risks of investing in this popular mutual fund.
| Characteristics | Values |
|---|---|
| Total Net Assets | $343.627 billion |
| Net Expense Ratio | 0.04% |
| 52-Week Average Return | 30.18% |
| YTD Lipper Ranking | Quintile 3 (45th percentile) |
| Minimum Initial Investment | $3,000 |
| Admiral Shares Minimum Investment | $10,000 |
| Admiral Shares Expense Ratio | 0.04% |
| Trailing 12-Month Return | 8.36% |
| 3-Year Return | 9.06% |
| 5-Year Return | 10.15% |
| 10-Year Return | 10.47% |
What You'll Learn
The minimum initial investment is $3,000
To start investing in VTSAX through Vanguard, you need to meet the minimum initial investment of $3,000. This amount is the entry point for investors looking to access Vanguard's Admiral Shares, which are a class of mutual fund shares designed for investors with a high minimum investment.
The $3,000 minimum investment is a significant sum, and it can be challenging for those who want to invest smaller amounts over time through strategies like Dollar-Cost Averaging (DCA). However, this minimum investment requirement is a one-time upfront cost, and subsequent investments can be as little as $1.
For those who find the $3,000 minimum investment challenging, there are alternative options. One suggestion is to invest in VTI, Vanguard's exchange-traded fund (ETF) version of VTSAX, which has no minimum investment. Another option is to explore other brokers like Fidelity or Schwab, which offer similar index funds with lower or no minimum investment requirements.
It is important to note that investing in broad-market, low-cost indexes, like those offered by Vanguard, is a passive investment strategy that focuses on long-term wealth accumulation. This strategy, advocated by Vanguard's founder, Jack Bogle, encourages diversification, low fees, and a buy-and-hold approach.
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The expense ratio is 0.15%
The Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. stock market. The fund's expense ratio is an important consideration when deciding whether to invest in VTSAX. The expense ratio of 0.15% is considered low by Morningstar, a leading investment research and management firm. This ratio indicates that for every $100 invested in the fund, investors pay $0.15 in fees. This is significantly lower than the category average of 0.85% for large-blend funds.
While the expense ratio of 0.15% is already low, there are ways to further reduce costs. The fund offers an admiral shares version with an expense ratio of 0.04%, which is even lower. However, this option requires a higher minimum investment of $10,000, compared to the standard minimum of $3,000.
It is worth noting that some sources suggest that the expense ratio of VTSAX is effectively 0%. This is because Vanguard lends shares from its index funds to institutions that want to short stocks, and the profits from this activity are returned to the funds for the benefit of shareholders. While this practice does not change the stated expense ratio, it can effectively reduce the overall costs for investors.
The low expense ratio of the Vanguard Total Stock Market Index Fund, including VTSAX, is a key feature of Vanguard's investment approach. The company is known for its low-cost index products, and this strategy has contributed to significant inflows of assets into its funds in recent years. As a result, Vanguard has become the largest mutual fund provider in the U.S., offering a diverse range of investment options for its clients.
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The fund's top holdings are in Apple, Microsoft, Amazon, Meta and Johnson & Johnson
The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is a popular investment fund that tracks the performance of the overall US stock market. When you invest in VTSAX through Vanguard, you gain exposure to a diversified portfolio of US stocks across various sectors and industries.
As of 2024, the fund's top holdings are in well-known companies such as Apple, Microsoft, Amazon, Meta, and Johnson & Johnson. These companies represent some of the largest and most established businesses in the US economy, spanning the technology, consumer discretionary, and healthcare sectors.
Apple, as a technology powerhouse, is known for its innovative products and services, including the iPhone, iPad, and App Store ecosystem. Microsoft, another technology giant, dominates the software industry with its Windows operating system and suite of productivity tools. Amazon, a leader in e-commerce and cloud computing, has transformed the way consumers shop and businesses operate. Meta, the parent company of Facebook, Instagram, and WhatsApp, is a social media and digital advertising behemoth. Johnson & Johnson, a healthcare conglomerate, is involved in pharmaceuticals, medical devices, and consumer goods, offering a range of well-known brands.
By investing in VTSAX, you gain indirect ownership of these companies and many others. The fund provides a convenient and cost-effective way to diversify your portfolio and capture the long-term growth potential of the US stock market. Vanguard's low-cost structure and passive investment strategy help minimize fees, allowing you to retain more of the returns generated by the fund's underlying holdings.
It's important to note that the fund's holdings can change over time, and the performance of these individual companies may vary. Diversification through VTSAX helps spread the risk across a wide range of companies, providing a more balanced investment approach.
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The fund has returned 8.36% over the past year
The Vanguard Total Stock Market Index Fund Admiral (VTSAX) has delivered solid returns over the past year, with an impressive 8.36% gain. This performance reinforces the fund's strong track record, as demonstrated by its 5-year average return of 13%.
VTSAX's investment approach is centred on tracking the CRSP US Total Market Index, employing a strategy that holds a diverse collection of securities approximating the index. This indexing approach has proven effective, as evidenced by the fund's notable 1-year return.
The fund's performance over the past year has been influenced by various economic factors and market trends. VTSAX's robust return of 8.36% reflects the fund's ability to navigate market fluctuations and capitalise on growth opportunities.
VTSAX's 1-year return of 8.36% is a testament to its resilience and consistent performance. This return is calculated based on the change in the fund's net asset value over the given period. It represents the cumulative impact of the fund's investment gains and losses, distributions, and expenses during that time frame.
Investors seeking to replicate or surpass this performance can consider investing in VTSAX through Vanguard. By investing in this fund, individuals can aim to benefit from its diverse exposure to the overall stock market, as it seeks to track the performance of a benchmark index like the CRSP US Total Market Index.
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Vanguard is the largest mutual fund provider in the US
Vanguard's size and scale allow it to offer low-cost investment options to the general public. The company's commitment to simplicity and cheap fees has made it a popular choice for investors, with a market share of about 23% in the US mutual fund market.
To invest in Vanguard's VTSAX fund, you will need to open an account with Vanguard. The minimum initial investment for the VTSAX fund is $3,000. This fund offers investors exposure to the entire US stock market in a single mutual fund investment, with nearly 3,700 different stocks across all sectors and company sizes. While the fund is biased towards large companies like Apple and Microsoft, it still provides broad diversification.
VTSAX is a low-cost index fund, with an expense ratio of 0.04%, meaning you pay $4 annually for every $10,000 invested. This low-cost structure, combined with Vanguard's scale, makes it an attractive option for long-term, buy-and-hold investors.
By investing in VTSAX, you will gain access to a well-diversified portfolio of US stocks, providing you with the potential for long-term capital appreciation. Remember, as with any investment, there are risks involved, and past performance does not guarantee future results. It is always recommended to do your own research and consult with a financial advisor before making any investment decisions.
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Frequently asked questions
The minimum initial investment is $3,000.
The expense ratio is 0.15%, which is considered low by Morningstar. The fund's admiral shares version offers an expense ratio of 0.04% with a $10,000 minimum investment.
Morningstar considers the fund's risk level to be average compared to other funds in the large-blend peer group.
The fund's top holdings are in Apple, Microsoft, Amazon.com, Facebook, and Johnson & Johnson.
As of October 31, 2017, the fund has returned 8.36% over the past year, 9.06% over the past three years, 10.15% over the past five years, and 10.47% over the past decade.
