One of the most popular ETFs on the ASX is Vanguard US Total Market Shares Index ETF (ASX: VTS). But could it be the best one to own?
But just because a lot of people have invested in it doesn’t mean that you should invest in it as well.
VTS ETF actually has a lot to like about it. Together, those factors could make it one of the best ETFs around.
One of the most important differences between ETFs is the annual management fee.
Costs are very important because they can detract from your long-term returns.
A 1% management fee (or more) may not sound like much in one year. But over many years it could reduce your portfolio by up to tens of thousands or even hundreds of thousands of dollars.
VTS ETF has an annual fee of just 0.03%. That’s almost nothing. It means that almost all of the returns generated by the underlying businesses stay in your hands, rather than paying for the fund manager’s next car.
Diversified and quality holdings
One of the main advantages of ETFs is that they give your portfolio instant diversification.
Some ETFs give exposure to many hundreds of businesses.
The VTS ETF has an astonishing 3,781 positions across its portfolio. You’re invested across most of the US share market with this investment.
It gives excellent diversification across industries as well. Technology gets the biggest weighting at 25.8%. But there are also a few other sectors with an allocation of more than 10%: Consumer discretionary, industrials, health care and financials.
The biggest holdings in the ETF’s portfolio are among the largest in the world. We are talking about names like Microsoft, Apple, Amazon, Alphabet, Facebook, Tesla, Visa, Mastercard and Berkshire Hathaway.
As an ETF, it has a high quality portfolio and it gives investors access to a great list of names.
The most important thing might be the returns.
Past performance is certainly not guarantee of future performance, but the VTS ETF has done very well in recent times.
Over the last decade it has produced an average return per year of 18.1%. In the shorter-term, over the last three years it has produced an average return per annum of 18%.