VTI: Truly Passive Investing In The U.S. Market
January 6, 2023
Summary
- In this article, I examine how investors can get truly passive exposure to the US equity market.
- Passive investing emerged from academia and offers benefits through diversification, low fees, and historically better performance than the average active manager.
- To passively invest in US equities, we need a market cap-weighted portfolio of all investable US stocks.
- One proxy for that is the CRSP U.S. Total Market Index which currently consists of slightly more than 4,000 stocks – 8 times more than the S&P 500.
- Historically, VTI followed this index with almost no tracking error and is thus among the best instruments to invest truly passively in US equities.
- SA #18: RPV – ‘Pure Value’ Is Indeed More Value Than ‘Value’
- SA #17: IUSV – Transparent Value With Modest Active Risk
- SA #16: IWD – Low Growth Is Not Necessarily Value – Also For Large Caps
- SA #15: VLUE – Transparent Value With Little Industry Bets
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