WHY INVEST VIA A STOCK MARKET INDEX FUND?

A stock market index offers broad exposure to a wide range of companies with one investment at a lower cost. To diversify on your own you would purchase stock in companies that are not correlated (think suntan lotion and umbrellas) in the right percentages.  

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WHAT IS A STOCK MARKET INDEX?

An index is a hypothetical basket of stocks. Indexes often represent the performance of a certain segment or sector of the overall market.  In the United States, the three most popular benchmarks are: the S&P 500, NASDAQ, and Dow (Dow Jones Industrial Average).

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HOW DO I INVEST IN AN INDEX?

As it is not possible to invest directly in an index, index funds were created to mirror the different indexes. Each fund’s performance is judged relative to its index or Benchmark.

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HOW DO I CHOOSE BETWEEN INDEX FUNDS?

The easiest choice is a “total stock market” index fund.  This type of index offers exposure to companies of all sizes across different industries.  

 

Alternatively, you may choose a fund that compliments your existing investments or choose a fund that matches your interest, such as: 

• Sustainability 

• Social impact  

• U.S. companies

• International companies

• Technology or other industries

• Big established companies or smaller growth companies

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When comparing funds, consider:

• Management Fee

• Performance over time (10, 5 and 3 years)

• Reputable issuer / fund family (such as Vanguard, Blackrock and Fidelity)  

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A short list of total stock market and other index funds follows to help you get started. Simply click on the Symbol to see detailed information for each fund.

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SELECTED INDEX FUNDS (ETF)

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This following list is not inclusive and is provided to make it easier for you to discover options. We are focused solely on your best interest, and therefore, we do not endorse or recommend any individual fund, stock or other investment. 

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Vanguard Total Stock Market ETF

Symbol: VTI

Expense: 0.04%

Benchmark/Focus: Entire domestic stock market, blue chips, mid- and small-cap equities

Holdings: 22% technology, 15% financial, 14% healthcare, 11% Industrials

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Schwab Total Stock Market Index

Symbol: SWTSX

Expense: 0.05%

Benchmark/Focus: Dow Jones U.S. Total Stock Market Index

Holdings:70% large-cap (technology, financials, healthcare, consumer, industrials)

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iShares Core S&P Total U.S. Stock Market

Symbol: ITOT

Expense: 0.03%

Focus /Benchmark: Total U.S. stock market 

Holdings: 3,000 stocks representing ~90% of companies traded on U.S. stock exchanges

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Vanguard S&P 500

Symbol: VOO

Expense: 0.04%

Benchmark/Focus: S&P 500 Index

Holdings: Large-cap companies

 

SPDR S&P 500 ETF

Symbol: SPY

Expense: 0.09%

Benchmark/Focus: S&P 500

Holdings: Large companies, such as Apple(APPL), JP Morgan Chase & Co. (JPM), Exxon Mobil Corp.(XOM)

 

iShares Russell 3000 Index Fund

Symbol: IWV

Expense: 0.20%

Benchmark/Focus: The Russell 3000 Index

Holdings: 75% of large-cap companies

 

Schwab U.S. Large-Cap Growth ETF

Symbol: SCHG

Expense: 0.04%

Benchmark/Focus: Growth Stocks

Holdings: Growth stocks doesn’t mean small companies, it refers to companies with faster revenue and profit expansion than peers, such as Amazon.com (AMZN) and Facebook (FB).

 

Vanguard Small Cap ETF

Symbol: VB

Expense: 0.05%

Benchmark/Focus: Small-cap companies (<$4 billion in market capitalization)

Holdings: Smaller banks, retailers, like Burlington Stores Inc. (BURL) and utilities, like NRG Energy Inc. (NRG)

 

Vanguard Total International Stock Market

Symbol: VXUS

Expense: 0.09%

Benchmark/Focus: FTSE Global All Cap ex US Index

Holdings: 6,000 stocks of companies in developed and emerging markets outside the U.S.

 

Vanguard FTSE Developed Markets

Symbol: VEA  

Expense: 0.07%

Benchmark/Focus: International companies in developed markets only