VTI - VTI: Impacts From New Interest Rates Outlook

2024-07-02 13:45:32 ET

Summary

• Vanguard Total Stock Market Index Fund ETF Shares offers advantages over the S&P 500 due to mid and small-cap company inclusion.
• Besides lower valuation, a potential rate cuts could benefit the VTI ETF more than large cap funds like those indexed on S&P 500.
• In this case, mid and small-cap companies may see higher stock price increases due to their heavier reliance on debt and their better growth potential than large caps.

VTI ETF: why we prefer it over SP500

In my last article on the Vanguard Total Stock Market Index Fund ETF Shares ( VTI ) (see the screenshot below), I analyzed the key reasons why I liked this total market fund better than funds indexed to the S&P 500 (SP500). The top reasons are valuation discount and growth potential, as summarized below:

The Vanguard Total Stock Market ETF offers advantages over the S&P 500 index due to its inclusion of mid and small-cap companies. The inclusion of mid and small-cap companies can provide exposure to higher growth potential at a much more reasonable valuation (even slightly discounted compared to the average in the past few years) compared to the S&P 500 index.

For further details see: