Exploring Low-Cost Index Funds: Beyond VOO
When it comes to investing in index funds, many investors gravitate towards the SP 500 fund (VOO). However, there are other compelling options available, such as the Vanguard Total Stock Market Index Fund (VTSAX). While VOO focuses on the largest US companies, VTSAX offers a more comprehensive approach to investing, covering a wider range of stocks.
Comprehensive Coverage vs. Selection Bias
According to data and market analysts, VTSAX, like other "Total Stock" funds, tends to outperform due to its broader coverage. By including a much wider range of companies, not just the largest ones, it can capture the performance of a larger segment of the market. This is often an artifact of lower volumes at the margins, meaning smaller and mid-cap companies can see more erratic price movements, which can sometimes lead to better overall returns.
Other Low-Cost Index Fund Options
While Vanguard offers a broad range of index funds, including its well-known VTSAX, it's not the only player in town. Many other fund companies offer their own comprehensive index funds. For example, Vanguard FTSE All-World ex-US ETF (VEU) provides exposure to non-U.S. markets, while BondIndex Fund (VBILX) can offer diversification through fixed income investments.
Adding Diversification: Custom Recommendations
If you're looking for even more comprehensive and well-diversified index fund options, you might want to explore a personalized approach. Investment newsletters like Marketimer can be a valuable resource. They often offer detailed analysis and personalized fund recommendations based on your unique financial situation. A subscription to Marketimer can provide you with insights into a wide range of low-cost index funds, including those from different providers.
Insights and Analysis from Experts
Experts like those featured in Marketimer's newsletter provide valuable insights into market trends and fund performance. Their recommendations can help you make informed decisions about which index funds to include in your portfolio. For example, they might suggest fund options that are less known but still offer strong performance and low costs.
Conclusion: The Importance of Diversification
Ultimately, the key to successful investing lies in diversification. While VOO and VTSAX are excellent choices, considering a broader range of low-cost index funds can help you achieve a more balanced and robust portfolio. If you're not sure where to start, exploring additional sources of expert advice, such as market newsletters, can be incredibly beneficial.