Is Vanguard U.S. Total Market Shares Index ETF the best way for Aussies to invest in US shares?

Is Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) the best ETF for Aussies to invest into US shares?

What is Vanguard?

Vanguard is a funds management business that is owned by its own investors. It was founded in 1975 and now has (or had) around AU$9.7 billion. It has 192 funds in the US, and 232 funds in markets outside the US. It’s a world leader in providing low cost ETFs.

Why Vanguard U.S. Total Market Shares Index ETF could be the best way for Aussies to invest in US shares

If you’re wanting to diversify your portfolio with US shares then this ETF could be one of the best ways to do it. Many ETF investors would know of iShares S&P 500 ETF (ASX: IVV). In some ways they’re similar but in some ways they’re very different.

How they’re similar

Both ETFs have very low management fees. At the moment the Vanguard U.S. Total Market Shares Index ETF has a slightly cheaper annual management fee of just 0.03%. That’s almost nothing compared to most other management fees charged by Australian fund managers.

When you look at the top holdings of both ETFs the same names feature at the top. Tech giants like Microsoft, Apple, Amazon, Facebook, Alphabet and so on. The biggest businesses in an index will have the biggest influence on the returns of an ETF. These big tech names are the ones that I’d want to have exposure to.

The earnings generated from both ETFs have a global slant. The US is obviously a large part of the global share market, but Apple sells phones all over the world. McDonalds has outlets across the globe. Visa and Mastercard have payment network infrastructure across the world. And so on.

Both ETFs offer extremely attractive statistics. The Vanguard U.S. Total Market Shares Index ETF has return on equity (ROE) of 16.9%.

How they’re different

As the name suggests, the S&P 500 is invested in 500 businesses. The Vanguard U.S. Total Market Shares Index ETF is invested in over 3,500 businesses. That provides much more diversification and it also means that the Vanguard ETF is invested in many more smaller businesses which may mean it is exposed to more growth.

In most other ways they’re quite similar. Not having to complete U.S. tax forms known as “W-8BEN” forms may also be a factor for some people. Plenty of people may prefer just to go for the fact that Blackrock offers the S&P 500. Whereas others may prefer to associate with and support Vanguard.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

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Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

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From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

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The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

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