The Vanguard US Total Market Shares Index ETF (ASX: VTS) is one of the most effective exchange-traded funds (ETFs) for a long-term investment, in my eyes.
There are plenty of good ETF investments that Aussies can buy, but this one particularly ticks the boxes for me, along with a handful of others.
It's provided by Vanguard, one of the world's leading fund providers. One of the key goals of Vanguard is to provide funds as cheaply as possible for investors. That's one of the first key advantages of this fund I'd like to tell you about.
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Low fees
Tracking the share market can deliver pleasing wealth-building returns. Ideally, we lose as little of that gross return to fees. It's the net return of an investment fund that matters the most.
The VTS ETF has an extremely low annual management fee of just 0.03%. That's cheaper than all of the other most popular funds on the ASX such as iShares S&P 500 ETF (ASX: IVV), BetaShares Australia 200 ETF (ASX: A200) and Vanguard Australian Shares Index ETF (ASX: VAS).
But it's not just low fees that make this fund attractive; that's not even the best part.
Excellent diversification
This fund gives investors exposure to a very large chunk of the US share market, which covers a lot of businesses. In-fact, as of the end of August 2025, it had more than 3,500 holdings. On the pure number alone, that's a lot of pleasing diversification.
However, there's a lot more to like about this fund's diversified portfolio.
The VTS ETF businesses are spread across a wide range of sectors, including technology (36.6% of the portfolio), consumer discretionary (14.5%), industrials (12.7%) financials (11.5%) and healthcare (9.1%).
Technology seems to be where a lot of the best-performing businesses come from, with pleasing profit margins. It's pleasing to have that as the largest industry weighting in the portfolio.
While all of these businesses within the ETF are listed in the US, plenty of them – particularly the biggest businesses – generate significant earnings from across the world. I think it's fair to think of this fund as having a global earnings profile, even if it's businesses are US listed.
Pleasing returns by the VTS ETF due to great businesses
Past performance is not a guarantee of future performance, particularly when it comes to businesses that are now worth trillions of dollars. It'll become harder for them to double in size again because of how much extra profit they'd need to make.
However, names like Nvidia, Microsoft, Apple, Alphabet, Amazon.com and Meta Platforms seem to be at the forefront of launching new products and services to unlock new earnings growth, while also delivering solid growth from their core operations. AI, cloud computing, online video and e-commerce seem like good growth tailwinds. I think the biggest US tech names can continue growing over the long-term.
The VTS ETF has managed to deliver an average return per year of around 15% in the last decade – very impressive. I'm not expecting it to be as strong in the next ten years, but I do believe the returns could still be pleasing over the long-term because of the quality of the businesses involved.
