VTI, the trading symbol of the Vanguard Total Stock Market Index Fund, is one of the easily accessible options for beginner investors to gain exposure to a broad selection of U.S. stocks, with over U.S. 3,800 shares held by the VTI exchange traded fund (ETF).
Since its launch in 2001, VTI has grown its assets to $1.4 trillion, helping spread its fixed expenses over a wide asset base. As a result, VTI remains a low-cost (expense ratio of only 0.03%) option for investors of all sizes, from individuals just getting started in investing to institutions with decades of experience in the markets, to track the investable stock universe in the United States.
In this article, we’ll share tips for choosing a stock broker to buy the VTI ETF, provide a step-by-step guide to help you make your first purchase, highlight data provided by the ETF sponsor Vanguard, delve deeper into the reporting structure of VTI, and more!
How to buy the VTI ETF (Step-by-step guide)
1. Choose a good stock broker
Since VTI is among the largest ETFs tracking the U.S. stock markets, you can choose from many brokers to help you purchase. That said, consider the terms offered by each broker and ensure the broker you pick works with residents of your country. Below we highlight four brokers which offer VTI:
|Broker||Stock commission, US||Minimum Deposit||Available countries|
|eToro||$0||$10 (varies for different countries)||Worldwide – exceptions apply.|
|Interactive Brokers||Free for US investors. Up to $0.0035 per share with a minimum of $0.35 for international investors||$0||Worldwide – exceptions apply.|
|Webull||$0||$0||US, Hong Kong, China, Singapore, Japan, UK, Australia|
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your ETF. All you have to do is find the ETF within your chosen broker and place a buy order. For this example, we will use eToro:
a) Search for Vanguard Total Stock Market ETF (or through the ticker “VTI”):
b) Click “Trade”:
c) Choose the order details. Now, it’s time to choose how to invest:
- Amount: You choose the amount you want to invest in VTI instead of the number of shares. In this way, your investments may be fully or partially in fractional shares.
- Units: As opposed to “Amount,” here you define the number of shares you want to purchase (note: you can buy using either “Amount” or “Units,” up to you!)
- Leverage: You can choose the level of leverage. “X1” means no leverage, while “X5” means both losses are profits are multiplied by 5. That’s why you see “CFD Trade.”
- Stop Loss: Define the maximum you are willing to lose before closing your position automatically;
- Take profit: Define the profit amount that makes you close your position automatically (if reached).
Stop Loss and Take Profit are not guaranteed and trading with leverage involves high risk.
Only the “Amount” (or “Units”) and “Leverage” are mandatory fields.
d) Place the order: Finally, click “Open Trade,” a new window will show up where it says “order filled,” your exposure, and lets you share your trade with others.
VTI, or the Vanguard Total Stock Market Index Fund, is an ETF that tracks the CRSP US Total Market Index, a broad United States-focused index that essentially covers nearly 100% of the U.S. investable equity market. You can learn more about the benchmark index in its Q2 2023 report, available here.
Despite its wide diversification (the ETF holds over 3,800 individual stocks), VTI is heavily weighted to the largest U.S. companies:
- Apple has a weight of ~6.70%
- Microsoft has a weight of ~5.80%
- Amazon has a weight of ~2.60%
As a result, the top 10 holdings of VTI currently account for about 26% of the ETF’s total exposure.
Since CRSP US Total Market Index weights and composition change constantly as prices move and new companies are added or deleted (the index is normally rebalanced four times a year), you can find detailed information on VTI’s holdings on its dedicated website, available here.
From a sector perspective, VTI is heavily tilted to the Technology sector, which accounts for 29.9% of ETF assets, followed by Consumer Discretionary at 14.50%:
The good thing about the VTI is that it is an excellent, low-cost (expense ratio of 0.03%) investment vehicle for beginner and entry-level investors, as all changes needed to track the performance of the CRSP US Total Market Index are automatically carried out by Vanguard, which manages the ETF. You only need to allocate capital to the ETF and (hopefully) watch it grow. VTI also pays dividends quarterly.
Vanguard’s website keeps track of some key statistics of VTI and its benchmark:
The two key ratios reported above are:
- Price/Earnings Ratio or P/E. A measure of the company’s profits relative to its market capitalisation.
- Price/Book Ratio, or P/B. A measure of the company’s accounting value relative to its market capitalisation.
An alternative way to gain exposure to U.S. markets is through the Vanguard 500 Index Fund (ticker VOO). You can read our dedicated article here.
Last but not least, If you want to expand your U.S. equity allocation with a diversified stock exposure to markets outside the United States, you may want to consider another Vanguard fund:
Vanguard Total International Stock ETF (ticker VXUS), which invests in almost 8,000 international companies. Largest holdings include TSMC at 1.52%, Nestle at 1.11%, and ASML at 0.98%. The ETF distributes dividends, and the expense ratio stands at 0.07%.
VTI’s Financials and Performance
Once you have purchased VTI ETF shares, keeping track of how VTI is doing relative to other ETFs is a good idea. Doing so will give you greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from Vanguard’s dedicated website (available here), there are specialised platforms to help you understand how VTI is doing from a financial perspective. One platform you can use is Koyfin – you can access ETF Holdings, Sector and Industry breakdowns, Dividend history, and more! Get a 20% discount on Koyfin.
For example, Koyfin allows you to quickly get a handle on VTI’s holdings and industry breakdown. That said, such platforms cannot substitute your research 100% of the time, but they can be useful tools in the research process, saving you time and providing new investment ideas.
Who is Vanguard?
Vanguard is the second-largest asset manager in the world, behind BlackRock. Vanguard is the asset manager that democratises index funds by offering them to the general public. You can read the company’s complete history here. Some key facts about the company are:
- Vanguard was founded in 1975.
- It currently manages 430 funds.
- It has over 50 million clients.
- It has 20,000 employees.
Hence it is fair to say Vanguard is one of the safest options when choosing an ETF provider.