The Vanguard U.S. Total Markets Shares Index ETF (ASX: VTS) is not among the most popular exchange-traded funds (ETFs) on the ASX.
This fund from provider Vanguard can boast of having $4.39 billion in assets under management. But that's a far cry from the $14 billion-plus that the ASX's most popular index fund – the Vanguard Australian Shares Index ETF (ASX: VAS) – can claim.
Even amongst other internationally-focused ETFs, VTS isn't among the biggest hitters. The iShares S&P 500 ETF (ASX: IVV), the BetaShares Nasdaq 100 ETF (ASX: NDQ) and the Vanguard MSCI Index International Shares ETF (ASX: VGS) all have more funds under management than the Vanguard US Total Markets ETF.
And yet, the ASX's VTS ETF offers a unique portfolio of investments that is unique on the Australian stock market. Let's dive into the how and why.
What does the VTS ETF offer ASX investors?
Put simply, this VTS ETF offers a scope of exposure to the US markets that no other ASX fund can match.
Take the iShares S&P 500 ETF. This popular index fund tracks the S&P 500 Index (SP: .INX), which is a collection of the 500 largest companies listed on the American stock markets. As such, an investment in IVV units can be thought of as an investment in the largest 500 companies on the US market, weighted by market capitalisation of course.
Similarly, the BetaShares Nasdaq 100 ETF allows investors to gain exposure to the largest 100 companies on the Nasdaq Stock Exchange. The Nasdaq is one of the two major American stock exchanges. It is known for housing most of the tech giants, including Apple, Amazon and Alphabet, that now dominate the US markets.
So IVV, NDQ and VTS all give investors exposure to the likes of Apple, Amazon and Alphabet. As well as other well-known US shares like Netflix, Meta Platforms, Adobe and PayPal.
But what makes VTS unique? Well, this really means what it says on the tin regarding 'total US markets'.
3,717 shares but one ASX ETF
Its portfolio consists of no fewer than 3,717 individual stocks (as of 31 March 2024 anyway).
Those 3,717 holdings are all US shares. That means that you are getting the largest of the large, as well as the smallest of the small, of all the United States of America has to offer.
As such, no other ASX ETF gives exposure to the US markets like VTS does. It's the ETF that investors are most likely to choose if they wish for a complete and dedicated investment in the American economy.
Of course, it's not quite as diverse as these numbers might suggest in practice. The VTS ETF has thousands of individual holdings. However, the fund still allocates close to a third of its portfolio towards the largest 10 American public companies.
This means that the bottom few hundred shares in this fund have an arguably near-tokenistic presence.
Even so, ASX ETF investors have enjoyed some solid returns from a VTS investment in recent years. As of 30 April, the Vanguard US Total Markets ETF has returned 24.47% over the preceding 12 months. As well as an average of 14.69% per annum over the past five years. Those figures are very similar to those of the IVV ETF.
The Vanguard US Total Markets ETF charges a management fee of 0.04% per annum, or $4 a year for every $10,000 invested.
