Vanguard Total Stock Market Index Fund

Vanguard Total Stock Market Index Fund – Complete Overview

The Vanguard Total Stock Market Index Fund, or VTSAX, was made in 1992 to offer investors exposure to the American equity market. Investors could access the US stock market at low costs and consider it a core equity holding or a sole domestic stock fund. As a mutual fund, it offers a huge exposure to small, mid, large-cap, and value stocks that get traded on the New York Stock Exchange as well as Nasdaq. The Total Stock Market Index Fund from Vanguard along with 55 index funds, are the two most popular products. VTSAX can represent all equity holdings in a portfolio. Continue reading below to learn more.

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The Role of the Vanguard Total Stock Market Index Fund

The VTSAX keeps an eye on the CRSP US Total Market Index. It covers the entire investable stocks in the US. Thus, it provides investors with good exposure to the stock market in the states. The large-blend category of Morningstar collects the funds of VTSAX.

Currently, the total investment of the fund’s assets is $271.25 billion. This amount was invested in 3948 holdings. Some of the major holdings of VTSAX are Amazon, Facebook, Microsoft, Johnson & Johnson, and Apple. This fund invests via sampling the index. It has a huge, diversified collection of securities. These securities make up almost the entire index according to some key characteristics.

VTSAX has also continually advanced the techniques used for minimizing tracking errors. Its advanced indexing process, less management fee, and robust trading pave the way for efficient tracking of expenses.

Key Things to Know About VTSAX

VTSAX is available as an exchange-traded fund, or ETF. Currently, the VTSAX closes at $204.22. Its day range is between $202.96 to $205.26, while the year ranges between $174.84 and $217.20. VTSAX market cap is 167.15B USD. Its NAV price currently is $99.39, and it shows a -$0.16 NAV change. The minimum investment price of VTX is $3000, and its expense ratio is 0.04%.

The Working or Strategy of Vanguard Index Funds

The strategy of Vanguard index funds is that of a passively managed index sampling. This strategy tracks a benchmark index. The benchmark type is as per the asset type of the fund. There are also expense ratios that Vanguard charges to manage the index fund. Investors are able to save money on fees and maintain their returns for long periods because of the expense ratios of Vanguard funds, which are the lowest in the industry.

This is why index funds from Vanguard enable investors to access the market through an easy-to-trade investment vehicle. In a passive management strategy, the fund manager does not try to surpass the performance of an index. In contrast, it implies that the fund only monitors the benchmark index.

The active management fees are more than passively managed funds. They also have higher trading costs because of more turnover in fund holdings, and there are expenses of compensation for fund management. All these things increase the fees of active management, and that is why the passively managed Vanguard index funds are so cost-effective.

Vanguard also uses index sampling. It tracks a benchmark index without replicating the holdings in the whole index. It enables it to keep its fund expenses minimal. Vanguard employs the index sampling strategy for the natural motion of capital for its funds. However, presently, we do not have much information about the particular sampling technique that Vanguard uses.

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Steps to Buying a Vanguard Mutual Fund

You can easily buy a Vanguard mutual fund by following the steps below.

  • Head to the official Vanguard website.
  • Locate the ‘Buy funds’ section.
  • Login and locate the account you want to use for buying the funds.
  • Choose the amount.
  • Now place a check on the box beside an existing fund.
  • When purchasing a new fund, select the box beside ‘Add another Vanguard mutual fund.’
  • A text box will display. Here, input the data for the fund you want.
  • Input the name of the fund, its ticker symbol or number.
  • Now, you will find fund choices displayed. Choose the fund you have to purchase.
  • Input the amount you wish to buy in the box besides the fund.
  • After that, hit ‘Continue.’
  • Now enlarge the menu on the right-hand part of the page.
  • Choose the funding method and hit ‘Continue.’
  • Now, you will head to the ‘Review and Submit’ page. Here, go through the transaction details.
  • When done, hit ‘Submit.’
  • In the confirmation screen, you will see your transaction details.

Popular Vanguard Index Fund Options

Apart from the Vanguard Total Stock Market Index Fund, there are various other good fund options from Vanguard. This gives investors much variety when wanting to decide on the funds to invest in.

POINT TO NOTE – It is critical to choose a Vanguard fund after reviewing the expense ratio and the historical performance of the fund.

  • Vanguard 500 Index Fund or VFIAX – This fund gives exposure to 500 of the biggest US firms. Also called Vanguard S&P 500 Index Fund, it makes up a huge proportion (75%) of the overall value of the US stock market.
  • VBTLX or Vanguard Total Bond Market Index Fund – It imparts good exposure to investment-grade bonds to US investors. It invests 30% in corporate bonds. The remaining 70% is invested in government bonds of differing maturities.
  • Vanguard Balanced Index Fund, or VBIAX – This fund has a mix of investments between stocks that make up approximately 60% stocks and bonds that constitute 40%. It lets you balance growth via exposure to various equities with stability. It is done through fixed-income investments.
  • Vanguard Small Cap Index Fund, or VSMAX – VSMAX targets small-scale, publicly held firms. This is for those who wish to diversify their investment portfolios but want to steer away from bigger public firms.
  • Vanguard Real Estate Index Fund Admiral Shares, or VGSLX – VGSLX invests in legal entities that are real estate investment trusts. It is ideal for you if you can take greater risk for dividend income.

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Concluding Words

The Vanguard Total Stock Market Index Fund is ideal for investors who can tolerate high-to-medium risk. VTSAX also works as a single domestic equity fund. Remember that the fund experiences greater volatility. You can find further risk information in its prospectus or available product material.