爱魔域

A one-stop shop for all US stocks.

Brendan McCann

Associate Analyst

Summary

Vanguard Total Stock Market funds offer highly efficient, well-diversified exposure to the entire US stock market while charging rock-bottom fees—a recipe for success over the long run.

The fund tracks the CRSP US Total Market Index, which represents nearly the entire investable US stock market. The index weights constituents by market cap after applying liquidity and investability screens to ensure the index is easier to track.

Market-cap weighting forms the bedrock of this strategy. It harnesses the market’s collective wisdom on each holding’s relative value with the added benefit of low turnover and trading costs. It’s a sensible approach because the market tends to do a good job pricing the large-cap stocks that make up the bulk of this portfolio. Large-cap stocks attract widespread investor attention, so prices quickly reflect new information.

Total-market funds mitigate transaction costs because they don’t target specific segments of the market and aren’t forced to buy or sell stocks when they enter or exit a market segment. Still, a small amount of turnover can occur at the lower rungs of the portfolio. The index implements buffer rules around its lower market-cap bound to limit unnecessary turnover. That’s a key feature since dealing in thinly traded small and micro-caps can increase transaction costs. The index further reduces trading costs by rebalancing over several days to limit market impact costs.

The index includes small- and micro-cap stocks, which improve the end portfolio’s diversification and can provide a modest performance edge when small caps rally, as they did in the fourth quarter of 2020. They tend to be more volatile than large-cap stocks but have minimal impact at less than 10% of the portfolio.

Market-cap weighting may expose the strategy to stock- or sector-level concentration risk when a few richly valued companies or sectors power most of the market gains. However, this strategy is less concentrated than its average peer in the US large-blend Morningstar Category. At year-end 2024, the fund held around 32% of its assets in the top 10 stocks compared with 50% for its average peer. No sector deviated more than 2 percentage points compared with peers. The funds’ heavy allocations to the technology sector could present some risk, but that is not a fault in the strategy’s design. The CRSP US Total Market Index simply reflects the market’s composition. In the long run, its broad diversification, low turnover, and low fee outweigh periodic concentration risks.

by Brendan McCann

Rated on Jan 29, 2025 Published on Jan 29, 2025

This strategy constructs a broadly diversified portfolio that accurately captures the entire investable US equity market.

Brendan McCann

Associate Analyst

Process High

It also keeps a lid on turnover by leveraging the market’s collective wisdom to size its positions. These simple yet effective traits earn a High Process Pillar rating.

The fund tracks the CRSP US Total Market Index. The index ranks all US stocks by their float-adjusted market cap after they pass basic liquidity and volume screens to ensure investability and easier tracking. Eligible stocks must have a market cap of at least USD 15 million and at least 12.5% of total shares publicly available. The index implements buffers along the lower market-cap bound to mitigate unnecessary turnover. It also spreads the rebalancing process over a five-day period to reduce potential market impact costs. The index reconstitutes quarterly.

The strategy approximates the contours of the US stock market because it relies on the market’s collective wisdom to size stock and sector weightings. Its sector composition is in line with the US large-blend category average, with no sector deviating more than 2 percentage points as of year-end 2024. Its value-growth bias also falls in line with its category peers.

Market-cap weighting consistently guides the index toward the largest and most established names. Small-cap stocks represent a much smaller slice of the portfolio. About 90% of the strategy’s assets represented companies with a wide or narrow Morningstar Economic Moat Rating at year-end 2024.

This portfolio tends to diversify away stock-specific risk. It has been significantly less concentrated than its average peer from its inception through year-end 2024. The strategy held 32% of its portfolio in the top 10, versus the US category average of 51% at year-end 2024. However, the fund’s share of assets in the top 10 holdings more than doubled since 2015. Apple and Microsoft have been fighting for the top two spots, and their collective share of the portfolio grew to 12% from 4% during that time.

by Brendan McCann

Rated on Jan 29, 2025 Published on Jan 29, 2025

Vanguard's equity index group earns an Above Average People Pillar for its well-supported and stable management team adept at leveraging Vanguard's comprehensive resources.

Brendan McCann

Associate Analyst

People Above Average

Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk-management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure that the management team's interests are closely tied to investors'.

by Brendan McCann

Rated on Jan 29, 2025 Published on Jan 29, 2025

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

Daniel Sotiroff

Senior Analyst

Parent High

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

by Daniel Sotiroff

Rated on Jul 28, 2025 Published on Jul 28, 2025

This strategy accurately represents the investable US equity market, allowing the fund to leverage its cost advantage and drive sound category-relative performance.

Brendan McCann

Associate Analyst

Performance

The fund’s low fee should help it beat its pricier US large-cap peers over the long run.

The strategy’s performance closely follows the ups and downs of the US stock market, since it is always fully invested. All else equal, this strategy should outperform its peers that hold cash during market rallies. Likewise, the strategy should lag similar peers when the market falls because it lacks a cash buffer.

After declining approximately 20% in 2022 amidst a series of interest-rate hikes, increased economic uncertainty, and higher inflation, the CRSP US Total Market Index staged an outstanding rally in 2023, albeit with above-average volatility. It climbed back 26% as a few names and sectors powered gains. Technology, communication services, and consumer cyclical stocks outperformed the market by a large margin, which this strategy captured through its broad reach and market-cap weighting.

This fund should benefit slightly when small-cap stocks outperform large-cap stocks, as they did in the fourth quarter of 2020. Likewise, when the CRSP US Total Market Index becomes concentrated in a few large companies, the strategy can become top-heavy. This exposes the funds to dramatic drawdowns when the US market’s largest holdings collectively decline.

by Brendan McCann

Published on Jan 29, 2025

It’s critical to evaluate expenses, as they come directly out of returns.

Brendan McCann

Associate Analyst

Price

Based on our assessment of the fund’s People, Process, and Parent Pillars in the context of these expenses, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Medalist Rating of Gold.

by Brendan McCann

Published on Jan 29, 2025