nisiprius wrote: ↑Sun Dec 05, 2021 9:54 am
Searching for the "best" is just going to keep you in a state of anxiety and constantly changing your portfolio when what you should be doing is leaving it alone. John C. Bogle wrote
Successful investing involves doing just a few things right and avoiding serious mistakes.
A total stock market index fund is an excellent way to capture U.S. equity returns. It's what I use myself (in my case, VTSAX which is the mutual fund version of VTI). It's what I recommend.
The article is really about the CRSP index specifically, and it's interesting. Several big firms offer total stock market index funds, tracking
different providers' total stock market index funds, and I feel there's no compelling reason to choose one over another. CRSP, Dow Jones Total Stock Market Index (not the Dow Jones Industrial Average, which is completely different), Russell 3000... pretty much the same.
There must be well over a dozen offering S&P 500 index funds. There is no
compelling reason for choosing total market funds over S&P 500 funds. There is no
compelling reason for choosing S&P 500 funds over total market funds. Wherever there is a difference, people will have differing opinions on what is "best." The important things to keep in mind are:
- A low-cost total market or S&P 500 index fund is an excellent way to capture U.S. equity returns.
- The difference doesn't matter much.
- Nobody can really say which is "best."
Here is a chart of Total Stock--VTSMX, the oldest version of the fund--and VFINX, the oldest S&P 500 fund--showing
five year moving averages.
a) they've never been very far apart,
b) the small differences have leapfrogged each other.
As you see, the biggest differences ever were:
4/1994 through 3/1999: Total market fund 23.31%, S&P 500 fund 26.16%
4/2001 through 3/2006: Total market fund 5.77%, S&P fund 3.84%
So average annual returns averaged over 60-month periods have never been more than about 2% different from each other.
But meanwhile, the difference between the worst and best five-year periods for the S&P 500 fund were:
3/2004 through 2/2009: -6.73%
1/1995 through 12/1999: 28.49%
Your choice of which index to use potentially could have made a difference of 2%.
The fluctuations of the stock market made a difference 35%.
We can see this even in the most recent data. The article mentions that the total stock market index beat the S&P 500 "partly because [of] Tesla." But over the past 60 months, the S&P 500 ETF, VOO, beat, or perhaps we should say tied, VTI:
As for "CRSP versus rivals," here are four funds tracking three different total market indexes. Vanguard tracks the CRSP total market index; Fidelity and Schwab use the Dow Jones
Total Stock Market Index (not the Dow Jones Industrial Average); iShares uses the Russell 3000.
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