Since it inception on July 7 1997, the Vanguard institutional Total stock market index fund has returned over 360% while consistently delivering a steady dividend.
In this article, we will compare its to other recent investments types and answer the question if the Vanguard Total stock market index fund is still worth it.
Table of Contents
Vanguard Institutional Total Stock Market Index Fund Overview
Just in case you happen to be a newcomer to investing, let’s quickly define what is an index fund.
What is an Index Fund ?
The name “index” fund comes defines a funds in which the holdings (stocks or bonds) track a specific market index.
Which means that the composition of the stocks matches whatever index it is tracking.
In the case of our Vanguard institutional Total stock market index fund, it tracks the S&P500.
Here below is the comparison of the Vanguard Total Market index Fund vs S&P 500 Top 10 Holdings.
Vanguard Total Market Index Fund Performance
As shown above, the composition of this index fund differ from the S&P 500 only by the allocation for each one of the stocks.
This means the the fund manager for the vanguard Total Market Index Fund (Ticker: VITSX) does not have to actively manage this fund.
Whenever there is a re-balance in the tracked ETF (S&P 500 in this case), VITSX will just match that by adjusting the shares allocations.
For a fund that manages 1.15 Trillion dollars in Net assets, the average return over the alst 5 year is around 10.%.
That is not bad especially when you add the 1.37% yield of the dividend the dividend.
How does this performance compare to other vanguard funds ?
Vanguard Total Stock Market Index Fund vs Vanguard Total International Stock Market Index Fund
Though in the same category as VITSX, the Vanguard Total International Stock market Index fund does not have the same performance as its counterpart.
Vanguard Total International Stock Market Index Fund (VGTSX) Overview
As its states, VGTSX focuses on international blend of stocks.
Since its inception in late April 1996, the funds seeks to match the performance of a benchmark index that measures the investment return of companies in developed and emerging countries.
The index tracked by the Vanguard Total international stock market index fund is the FTSE global All Cap .
All top three holdings are located in Asia.
Unlike VITSX, their contribution does not represent a great proportion of the overall fund.
This means that even if Taiwan Semiconductor, Tencent and Alibaba perform quite well, that will not have a very strong impact on the Vanguard Total international Stock market index Fund.
Higher Expense Ratio for VGTSX vs. VITSX
In comparing index funds, I enjoy contrasting Expense ratios.
Because that is money that as an investor, I do not get to carry forward and make more money from.
Therefore, If the expense ratio is much higher in the case of the Vanguard total international stock market index fund, one ought to expect better returns.
Is that the case ? The answer is sadly No.
Indeed, over the last past 5 years, the Vanguard Total stock market index fund dwarfs its international counterpart by a magnitude of almost 3 !
Conclusion, VITSX is better than VGTSX.
Does it mean though that it is one of the best index fund out there at the moment ?
The Vanguard Institutional Total Market Index Fund vs ARK ETFs
I am fully aware that that Vanguard Total market index Fund is a passive investment while while ARK Etfs are actively managed.
If you do believe it is not a fair comparison, let me bring it to a leveled playing ground.
The goal of any investment is to make as much money as possible.
So why settle for the passive way if the actively managed ones can achieve a superior performance ?
ARK Innovation ETFs Are Game Changer
Ark invest has launched a suite of actively managed Exchange Trade Funds recently.
In short a very short time since their inception, the ARK Invest ETFs have generated some spectacular returns.
Here is our recent video review to judge for yourself.
From ARKK to ARKF, 2020 was a year to remember for those investors who were able to take advantage.
Given the 2020 yearly return of 152%, the 0.75% Expense ratio of the fund turns out not to be a major concern.
Wouldn’t you agree ?
We scrutinized the Vanguard Institutional Total Stock market Index fund through its Top 10 holdings and Performance.
You witnessed a comparison to one of its international peers.
Then introduced a possible alternative in the Sizzling ARK ETFs.