Best Total Stock Market Index Funds

On Sep 23, 2021

Index funds have gained enormous popularity with investors over the past few decades as a cost-effective way to gain access to highly diversified portfolios. Through mutual funds and ETFs, total market index funds allow investors to purchase a basket of stocks that track an index focused on the overall U.S. stock market. They can be a great way for investors to benefit from a country’s economic growth without having to select which individual companies to invest in.

Here’s what else you should know about total market index funds and a few options to consider.

What is a total stock market index fund?

A total market index fund is a mutual fund or ETF that tracks an index focused on virtually the entire stock market of a country or region. Many people are familiar with index funds that track popular indexes such as the S&P 500 or the Dow Jones Industrial Average, but those funds hold companies with large market capitalizations and exclude small and mid-sized companies. Total market funds hold companies across the market-cap spectrum and allow investors to earn the return of the overall stock market.

Most total market index funds are weighted by market capitalization, so the funds will still have a large exposure to the largest companies in the U.S. such as Amazon, Apple and Microsoft. But the funds will also own small-cap companies that may have more room to grow and potentially earn higher returns than their large-cap counterparts.

Total market index funds typically come with very low fees, allowing more of the return to fall to the funds’ investors. This is a key part of index-fund investing, which allows investors to earn the return of the market without needing to have deep financial knowledge or stock-picking skills. Keeping expenses low has proven to be a successful investing strategy for many.

Top performing total stock market ETFs

Bankrate selected its top funds based on the following criteria:

U.S. funds that appear in ETF.com’s screener for U.S. total market
Funds among the top performers over the last five years
Performance measured on Sept. 20, 2021 using the most recent figures

Vanguard Total Stock Market ETF (VTI)

This ETF seeks to track the performance of the CRSP U.S. Total Market Index and invests in large-, mid- and small-cap companies across the value and growth styles.

Year-to-date performance: 18.4 percent
Historical performance (5-year annual): 17.9 percent
Expense ratio: 0.03 percent

Schwab U.S. Broad Market ETF (SCHB)

This fund’s goal is to track the total return of the Dow Jones U.S. Broad Stock Market Index, which includes companies across the market-cap spectrum.

Year-to-date performance: 18.5 percent
Historical performance (5-year annual): 17.9 percent
Expense ratio: 0.03 percent

iShares Core S&P Total U.S. Stock Market ETF (ITOT)

This fund seeks to track the performance of the S&P Total Market Index and currently holds more than 3,700 securities.

Year-to-date performance: 18.5 percent
Historical performance (5-year…