The Cheapest Way to Own the S&P 500

The diversity of investment offerings from Vanguard, a low-expense-ratio exchange-traded fund (ETF) provider, is showcased in this week’s ETF Talk that features Vanguard S&P 500 ETF (VOO), an S&P 500-based ETF.

VOO is one of Vanguard’s most popular funds; it held $21.8 billion in assets under management at the end of the third quarter. This fund’s expense ratio of just 0.05% is 95% lower than the average for funds with similar holdings.

VOO tracks the performance of an index that measures the investment return of large-capitalization stocks. It attempts to replicate the results of the S&P 500, holding each stock in approximately the same proportion as its weighting in the index.

Like the S&P 500, VOO has performed strongly this year by rising 10.71% so far. VOO also offers investors a bit of income with a 1.83% dividend yield.

VOO’s top 10 largest holdings comprise 17.63% of its assets. Its five largest positions are Apple Inc. (AAPL), 3.43%; Exxon Mobil Corp. (XOM), 2.28%; Microsoft Corp. (MSFT), 2.17%; Johnson & Johnson (JNJ), 1.71%; and the General Electric Company (GE), 1.46%.

The S&P 500 is having a very strong year, so if you want to go long in the large-cap segment of the domestic equity market, consider putting your money to work in the low-expense-ratio Vanguard S&P 500 ETF (VOO).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.