Why Vanguard US Total Market Shares Index ETF (ASX:VTS) could be the best ETF

There has been a big rise in the amount of money invested in passive funds compared to active funds over the past few years.

Market experts are always touting the idea of investing for the long-term, having a diversified portfolio and trying to lower your fees.

Therefore, it does make a lot of sense to invest in exchange-traded funds (ETFs). An ETF is simply an index fund that you buy through a stock exchange like ASX Ltd (ASX: ASX).

However, there are still countless ETF options to choose from.

Perhaps you should consider Vanguard US Total Market Shares Index ETF (ASX: VTS).

Vanguard run a variety of ETFs including ones that focus on different geographical areas and ones that focus on different asset classes.

The Vanguard US Total Market ETF gives investors exposure to some of the world’s largest companies which are listed in the US.

Let’s look at the three aspects I said market experts consider about investing:

Diversified portfolio

One of the best points about choosing this ETF is how diversified it is. At the end of April 2018 it had 3,629 holdings, making it one of the most diversified ETFs in the world.

Its top 10 holdings are Apple, Microsoft, Amazon, Alphabet (Google), Facebook, JPMorgan Chase, Berkshire Hathaway, Johnson & Johnson, Exxon Mobil and Bank of America.

Most of the above companies are global giants, you’re not getting exposure to just the American economy.

Investing for the long-term

This one is more up to you. All you need to do is buy and hold this ETF. It could be one of the easiest shares to hold.

It should be quite an easy one to hold considering it has delivered an average return over the last five years of 20.15% per annum. I wouldn’t expect that over the next five years, but it shows that the American and global economy are performing stronger than Australia.


If you’re achieving a market ‘average’ return, then you want the fees associated with that return to be as low as possible.

The Vanguard US Total Market ETF only charges a management fee of 0.04% per annum, which is one of the lowest fees in the world.

Foolish takeaway

I think this is one of the best ETFs to own considering how good its top holdings are. If I were looking to buy a broad-market ETF then it would be this one or Vanguard MSCI Index International Shares ETF (ASX: VGS).

However, if you want to beat the market and stick with individual shares then these top stocks could be exactly what you’re looking for.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ASX Limited. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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