Broad market exchange-traded funds (ETFs) are some of the best investments to build a portfolio around. In some cases, they hold thousands of different stocks and come with razor-thin expense ratios. That makes them perfect for long-term capital growth.
The one ETF that I hold for just this purpose is the Vanguard Total Stock Market ETF (VTI 1.29%). For my money (literally), there is no better buy-and-hold fund in the market.
What makes the Vanguard Total Stock Market ETF great?
Many people use the Vanguard S&P 500 ETF or the SPDR S&P 500 ETF as the center of their portfolios. There's certainly nothing wrong with that since these S&P 500 funds include many of the biggest and best companies in the world.
But they're also incomplete. You'd be missing out on roughly 3,000 other U.S. stocks. From a market cap perspective, those 3,000 names only account for about 20% of the entire U.S. equity market. But that's a non-trivial amount that can be a game changer for performance when the market shifts.
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The Vanguard Total Stock Market ETF tracks the CRSP US Total Market Index, which essentially includes the entire liquid U.S. stock market. It holds roughly 3,500 different stocks in total, including top holdings Nvidia, Apple, Microsoft, Amazon, and Alphabet. Since the fund is market cap-weighted, it's still tilted heavily toward large-cap names. But it also has around 25% of the portfolio committed to mid-, small-, and micro-cap stocks.
NYSEMKT: VTI
Key Data Points
Over the long term, I believe that owning the entire U.S. stock market is better than owning just the large-cap market. While large caps have certainly outperformed over the past several years, it won't be like that forever. Large caps and small caps often go in multiyear cycles where one outperforms the other. Owning both groups allows you to both capture the above-average return potential of smaller companies and smooth out some of the market highs and lows by being more diversified.
Here's why now is a good time for broad market ETFs
It's still early in 2026, but we've already seen a big rotation away from the megacap growth stocks that have driven the market lately. The tech sector (as of Feb. 2) is only the eighth best-performing S&P 500 sector of the 11 total and it trails the S&P 500 by about 1.5% year to date.
2026's best performers so far are sectors that have gone unloved for years -- energy, materials, and consumer staples. Not only are they outperforming, they're all beating the S&P 500 by at least 7 percentage points so far this year. It doesn't end there either. Small caps are leading by about 5 percentage points. Value is leading by 4 percentage points. Even low-volatility stocks are ahead by about 1.5 percentage points.
This helps demonstrate that diversification still works. If small-caps are in the early stages of a lengthier cycle of outperformance relative to large caps, the Vanguard Total Stock Market ETF could continue to outperform the S&P 500 as it has so far in 2026. This ETF also helps mitigate some of the risk of high valuations and may lower overall portfolio risk in the process.
For me, owning the entire U.S. stock market is the better long-term play.
