The Vanguard Total World Stock ETF (VT 0.62%) is an extremely well-diversified exchange-traded fund (ETF). By investing in this ETF, you essentially become part owner of companies that span the global economy, including U.S. and foreign companies.
The fund comprises companies in both well-developed and emerging markets, providing favorable exposure to a notable range of assets at a relatively modest cost to investors. If you're interested in investing in the Vanguard Total World Stock ETF, here's what you need to know about the fund and investing in ETFs.
Exchange-Traded Fund (ETF)
What is it?
What is Vanguard Total World Stock ETF?
The Vanguard Total World Stock ETF is managed by The Vanguard Group. This firm is the world's largest provider of mutual funds and one of the top providers of ETFs, outpaced in the latter arena only by BlackRock (NYSE:BLK).
Many ETFs track the performance of a specific index. The Vanguard Total World Stock ETF tracks the FTSE Global All Cap Index, which tracks the performance of stocks for companies around the world. This includes a collection of small-cap, mid-cap, and large-cap stocks. The index covers about 98% of global investable market capitalization and includes approximately 9,800 holdings in more than 47 countries.
The fund is passively managed, as opposed to some actively managed ETFs. A passively managed ETF like the Vanguard Total World Stock ETF aims to match the performance of its benchmark index, while the intent of an actively managed fund is to outpace the performance of the index it follows.
How to buy
How to buy Vanguard Total World Stock ETF
If you want to invest in the Vanguard Total World Stock ETF, it's a simple process. You can buy shares through Vanguard or purchase shares of the ETF directly through your brokerage account.
Step 1: Open a brokerage account
If you intend to purchase shares of multiple ETFs from Vanguard, opening an account with the company and buying directly through its platform might make the most sense. However, if you don't have an existing brokerage account and want to open one to buy shares of the Vanguard Total World Stock ETF, getting your account ready to go takes just minutes.
You can purchase shares through brokerage firms like Fidelity or Robinhood (HOOD 3.29%). Take the time to do your research to determine which brokerage firm makes the most sense for your needs.
Step 2: Figure out your budget
Before you purchase shares of the Vanguard Total World Stock ETF, you want to figure out your budget and how much money you want to invest. When building out your investment portfolio, it's best to diversify your capital across 25 or more stocks representing various industries and sectors.
You should also have a minimum buy-and-hold horizon of at least five years. Because the Vanguard Total World Stock ETF features thousands of companies across virtually all market sectors, you can enjoy instant diversification to both well-known and emerging businesses worldwide.
If you're a beginner investor, buying shares of this ETF for the long term can be a quick way to start your diversification journey. Over time, you can deploy methods like dollar-cost averaging to consistently put capital into your favorite investments, including individual stocks and ETFs.
Step 3: Do your research
If you're considering purchasing shares of the Vanguard Total World Stock ETF, you want to be sure you do your research first. While a team of investment professionals has already vetted the holdings in this ETF, you still need to make sure that the composition of the ETF aligns with the investment objectives and risk profile you've outlined for your personal portfolio.
You should also compare and contrast other ETFs for your portfolio. Consider the investment strategies of the Vanguard Total World Stock ETF compared to other funds, whether you prefer actively or passively managed funds, the funds' track records, and the expense ratios involved.
Step 4: Place an order
Once you have your brokerage account pulled up and ready to go, you know your budget, and you've decided you're ready to buy shares of the Vanguard Total World Stock ETF, it's time to place your order. Search for the ticker symbol VT and fill out the order page on your Vanguard account or brokerage account.
In addition to the ticker, you'll need to select details such as the number of shares you want to buy. Depending on your brokerage account, you can even buy fractional shares of an ETF like the Vanguard Total World Stock ETF. Finally, decide whether you want to place a market order or a limit order for the ETF.
The key benefit of placing a market order is that your purchase goes through right away at the current market price, which tends to be the best option for most investors.
Holdings
Holdings of Vanguard Total World Stock ETF
As of mid-2024, the Vanguard Total World Stock ETF contains 9,850 stocks. At last count, the ETF comprises approximately $49 billion in assets under management (AUM), which is the market value of the investments contained in the fund. This figure will change with time, both as new shares are created and as the value of the shares themselves fluctuate.
The Vanguard Total World Stock ETF's top 10 holdings as of June 30, 2024, are as follows:
- Microsoft (MSFT 1.06%): 3.9%
- Apple (AAPL 0.67%): 3.6%
- Nvidia (NVDA 3.43%): 3.5%
- Amazon (AMZN 1.52%): 2.1%
- Meta Platforms (META 4.23%): 1.3%
- Alphabet, Class A shares (GOOGL 2.65%): 1.3%
- Alphabet, Class C shares (GOOG 2.5%): 1.1%
- Eli Lilly (LLY -2.16%): 0.9%
- JPMorgan Chase (NYSE:JPM): 0.9%
- Taiwan Semiconductor Manufacturing (TWSE:2330): 0.9%
These top 10 holdings comprise 19.5% of the Vanguard Total World Stock ETF's total net assets. Given the diverse range of companies featured in this ETF, the fund also provides exposure to numerous stock market sectors. Its sector exposure as of mid-2024 is as follows:
- Technology: 27.4%
- Financials: 14.2%
- Consumer discretionary: 13.5%
- Industrials: 13.4%
- Healthcare: 10.4%
- Consumer staples: 5%
- Energy: 4.6%
- Basic materials: 3.5%
- Utilities: 2.8%
- Real estate: 2.7%
- Telecommunications: 2.6%
Broken down by region, the Vanguard Total World Stock ETF's holdings are distributed as follows:
- Emerging markets: 9.8%
- Europe: 14.7%
- Pacific: 9.8%
- Middle East: 0.20%
- North America: 65.50%
Should I invest?
Should I invest in Vanguard Total World Stock ETF?
The Vanguard Total World Stock ETF might be a good fit for your portfolio for numerous reasons. The ETF is a relatively low-cost, passive investment option that can provide instant diversification to your portfolio, as other ETFs do.
If you're looking for an investment that can deliver returns that track the FTSE Global All Cap Index and provide exposure to a global collection of stocks, including some of the world's most well-known brands, this ETF may be a wise addition to your portfolio.
On the other hand, if you want an ETF with less concentration in the fund's top holdings or one that exceeds rather than matches the performance of the FTSE Global All Cap Index, you may want to consider alternative options. It's important to understand that any investment, including an ETF, presents a level of risk. No investment is guaranteed.
Dividends
Does Vanguard Total World Stock ETF pay a dividend?
The Vanguard Total World Stock ETF pays a regular quarterly dividend. As of mid-2024, that dividend yield is approximately 1.89%. Its dividend has steadily risen through the years. On an annual basis, its dividend per share is $2.21. The fund features a payout ratio of about 37%.
Expense ratio
What is Vanguard Total World Stock ETF's expense ratio?
Vanguard funds are known for their low expense ratios. The Vanguard Total World Stock ETF features an expense ratio of 0.07%, significantly lower than the average for global funds, which is around 1%. The lower the expense ratio, the more you keep from the returns of the ETF you invest in.
Expense Ratio
For instance, the management fees that Vanguard would charge someone for a $5,000 investment in the Vanguard Total World Stock ETF would amount to approximately $3.50 per year.
Related investing topics
Historical record
Historical performance of Vanguard Total World Stock ETF
The Vanguard Total World Stock ETF's goal is to closely track the average return of the FTSE Global All Cap Index. It has delivered on that goal through the years, as outlined in the table below by total cumulative return in terms of market price and net asset value:
| Return period | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|
| VT market price | 18.55% | 15.85% | 66.34% | 125.76% |
| VT (NAV) | 18.52% | 15.89% | 66.06% | 125.84% |
| Benchmark | 18.81% | 16.16% | 66.50% | 127.29% |
The bottom line on Vanguard Total World Stock ETF
The Vanguard Total World Stock ETF has delivered on its promise to investors through the years, even as its performance has trailed the returns of other indexes, like the S&P 500. This ETF may be a wise choice for investors wanting to diversify their portfolio with premier companies around the globe and lesser-known businesses, all while enjoying a low expense ratio and steady dividend income.
FAQ
Investing in Vanguard Total World Stock ETF FAQ
How do you buy the VT ETF?
You can buy shares of the Vanguard Total World Stock ETF through Vanguard or your preferred brokerage platform.
Is the Vanguard Total World Stock ETF a good investment?
The Vanguard Total World Stock ETF is a quality investment that offers exposure to small, mid-sized, and large companies around the world for a low expense ratio and healthy average annual returns.
What is the average return of the Vanguard Total World Stock ETF?
The cumulative return of the Vanguard Total World Stock ETF over the trailing 12 months has totaled around 18%, while that return sits around 66% over the trailing-five-year period.
What is the ticker symbol for Vanguard Total World Stock ETF?
The ticker symbol for Vanguard Total World Stock ETF is VT.
