VTI Review 2023: A Vanguard US total Market ETF

Are you looking to invest in US stocks but want something more comprehensive than your average S&P 500 Index ETF?

While the S&P 500 targets a wide range of US large-capitalization stocks, a US total market ETF invests in US stocks of all sizes, including small and medium-sized companies.

Looking at US stock performance, more specifically, that of the S&P 500 Index, only 27% of the years between 1927 and 2018 had negative returns. Over this same time period, 94% of 10-year periods offered investors a positive return.

It can be difficult to put together a portfolio of US stocks – it is usually a much better idea to look for a comprehensive and low-cost ETF of US equities. I will provide a VTI review and go through some of the key features of the fund to consider.

Our Verdict
DailyRewards Canada Review
9.5/10Our Score

Vanguard VTI

Low-cost US stock ETF

A US-Listed ETF from Vanguard that covers the broad US stock market.

Pros
  • Extremely low fees
  • High liquidity
  • Massive in size
  • Comprehensive US stock coverage
Cons
  • Must be purchased in US dollars
  • Fairly low yield

What is Vanguard’s VTI ETF?

VTI is a US total market ETF that invests in the broad US stock market, regardless of how small or large a company’s market capitalization is. VTI is US-listed, meaning that it must be traded in US dollars, which can be done on the US side of your accounts here in Canada.

VTI was launched on May 24, 2001, and is a massive fund in terms of assets. A long performance track record and a large asset base are both positive features of a fund.

VTI comes with a four out of five risk rating.

VTI Ratings

What does VTI Invest In?

The VTI ETF invests entirely in US stocks of varying sizes. The ETF currently has over 4,000 underlying stocks and invests in a wide variety of US stocks in order to give diversified exposure to the broad US stock market.

VTI’s holdings include:

  • Small-cap US stocks
  • Mid-cap US stocks
  • Large-cap US stocks
  • Value US stocks
  • Growth US stocks

Keep in mind that stocks typically require a medium risk tolerance and can be volatile during difficult market environments.

Since the ETF invests more broadly than a large-cap index like the S&P 500, it offers investors a well-diversified approach to investing more broadly in US stocks.

VTI Management Expense Ratio

VTI’s management expense ratio is extremely low, and it likely ranks among some of the most inexpensive ETFs in the world. Vanguard offers the VTI ETF at a management expense ratio of 0.03%.

As a US-listed ETF, VTI is significantly more inexpensive than Vanguard’s Canadian-listed equivalent, the VUS ETF. The VUS ETF is offered by Vanguard in Canadian dollars (on a currency-hedged basis) at a management expense ratio of 0.16%.

VTI Yield

The VTI ETF pays a relatively low yield relative to more income-focused investments. It currently pays a yield of just over 1.50%

VTI pays distributions to investors on a quarterly basis.

VTI Performance

Since VTI is a passively-managed ETF that tracks the performance of the broad US stock market, its results will be closely tied to overall market conditions.

Although the fund has struggled throughout 2022, like most passive stock ETFs, it has rewarded investors with an excellent total rate of return over the long term.

US stocks have been one of the best-performing asset classes over the past few decades despite the short-term volatility that can be experienced.

VTI Performance

VTI Top Holdings

As of November 30, 2022, VTI’s top holdings were:

VTI Top Holdings

Keep in mind that a fund’s top holdings are constantly changing as time passes.

VTI vs Other Fund Alternatives

There are a few ETF alternatives if you are looking for a similar investment exposure as the one provided by VTI.

VTI vs VUS

The VUS ETF is a Canadian-listed alternative that provides access to the same broad market index as the VTI – the CRSP US Total Market Index but on a currency-hedged basis. VUS is a good option to consider if you are looking to invest using Canadian dollars.

In a perfect world, the returns between the VTI and VUS ETFs should be identical; however, VTI does outperform over most timeframes due to its lower fees and reduced complexity (no need to hedge currency exposure).

VUS is a much smaller ETF relative to VTI in terms of assets under management. VUS also comes with a much higher management expense ratio of 0.16% relative to VTI’s MER of 0.03%.

If you are looking to avoid currency exposure and invest using Canadian dollars in the broad US market, the VUS ETF is a good alternative to consider. Given the fund’s higher MER, I do not recommend it over the VTI ETF.

VTI vs VUN

The VUN ETF is another Canadian-listed alternative from Vanguard that provides access to the same broad market index as the VTI – the CRSP US Total Market Index, without hedging currency impacts. The VUN ETF is another good choice to consider if you are looking to invest using Canadian dollars.

Since the VUN is currency-unhedged, this has helped the fund to outperform its currency-hedged counterpart, the VUS, over the long term. This is because the US dollar has been consistently appreciating against the Canadian dollar over the past several years.

The VUN ETF has even outperformed the VTI ETF over most time periods due to the positive impact of a strengthening US dollar. VUN is a much smaller ETF than VTI in terms of assets and is again substantially more expensive with an MER of 0.16%.

Considering the positive impact that currency has had on the performance of VUN, I recommend it over the VTI ETF.

Is VTI a Good Investment?

Idea 4 - Case-by-Case Investments Based on Current Conditions

Considering VTI’s overall features, it is an excellent option for investing in the broad US stock market.

VTI, similar to many US-listed ETFs, is substantially more inexpensive in terms of fees relative to Canadian-listed ETFs.

The VTI ETF allows you to target the US stock market more broadly than more concentrated indices such as the S&P 500, the NASDAQ 100, or the Dow Jones Industrial Average.

Relative to Vanguard’s Canadian options (VUN and VUS), VTI is a much larger ETF and is offered at a much lower cost. If you are looking to invest using US dollars, it remains an excellent choice.

If you are looking to invest in the broad US stock market using Canadian dollars, consider using the VUN ETF.

How to Buy the VTI ETF in Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
  • 105 commission-free ETFs to buy and sell
  • Excellent customer service
  • Top-notch market research tools
  • Easy-to-use and stable platform 
Low Fees
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
  • Reputable fintech company
  • Fractional shares available
Well-Rounded
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada.

Our Final Verdict

If you are looking to invest in US stocks using US dollars, VTI is a good ETF to consider for broad market exposure.

Before investing in a stock ETF, make sure that it matches your risk tolerance. Although US stocks have offered long-term investors phenomenal returns after several decades, keep in mind that they can be extremely volatile in the short term.

If you are a newer investor, be sure to read my guide on how to start investing in Canada, which can help you determine your risk tolerance and asset allocation.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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