In hopes of capturing more dollars, companies big and small love to boast they offer one-stop shopping. Investing is no different. Vanguard, for example, has a one-stop offering for investors who want to simplify their exposure to the U.S. equity market: the Vanguard Total Stock Market Index fund. It tracks the return of the MSCI U.S. Broad Market Index.

This type of fund is certainly convenient, but is it the best approach for U.S. stock market exposure, the heart of many clients' investment portfolios? Another approach would be to invest in separate index funds from the large-cap, mid-cap and small-cap sectors represented in the Total Stock Market Index. Assume those separate funds are Vanguard 500 Index Investor (a proxy for the S&P 500), Vanguard Mid-Cap Index and Vanguard Small-Cap Index. Vanguard Mid-Cap attempts to mimic the MSCI U.S. Mid-Cap 450 Index, while Vanguard Small-Cap tracks the MSCI U.S. Small-Cap 1750 Index.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access