Is VTI really "total stock market" with only 1478 holdings?

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hazlitt
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Is VTI really "total stock market" with only 1478 holdings?

Post by hazlitt » Wed Feb 14, 2018 10:05 pm

Is VTI really "total stock market" with only only 1478 holdings? Compared to the Russell 3000 or the Wilshire 5000?

And is VXUS really "total international stock market" when it has half the holdings of VEA (Vanguard Developed Markets)? 909-1827

I'm trying to get on board with the 3-fund portfolio. But these "total market" funds seem limited to me. VTI is basically the S&P 500 with some mid cap and a little bit of small caps. VXUS is basically VEA with more large caps and more emerging markets. Or at least it seems that way to me.

Good funds? Absolutely. But I'm not convinced (yet) they're good enough by themselves. I guess that's where the "tilt" comes in for some people. Maybe I'm overthinking it. I've got VEA (Developed Markets), VWO (Emerging Markets), and VSS (small caps ex-US) for international. I've got VOO (S&P 500) and VIOO (S&P 600) for US (and a couple of value funds).

How much of the value of the 3-fund is actual growth (with minimal volatility) vs things like simplicity, tax-efficiency, ease of rebalancing, etc.? I'm not denying that those things have value. Just that, for me at this point in my life, growth is more important.

stlutz
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by stlutz » Wed Feb 14, 2018 10:11 pm

VTI has 3638 holdings according to Vanguard.com

VXUS is 6283.

AlohaJoe
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by AlohaJoe » Wed Feb 14, 2018 10:12 pm

edit: stlutz was 30 seconds faster :shock:
hazlitt wrote:
Wed Feb 14, 2018 10:05 pm
Is VTI really "total stock market" with only only 1478 holdings? Compared to the Russell 3000 or the Wilshire 5000?
VTI has 3,638 holdings.

Image
And is VXUS really "total international stock market" when it has half the holdings of VEA (Vanguard Developed Markets)? 909-1827
VXUS has 6,283 holdings.

Image

RRAAYY3
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by RRAAYY3 » Wed Feb 14, 2018 10:15 pm

hazlitt wrote:
Wed Feb 14, 2018 10:05 pm
Is VTI really "total stock market" with only only 1478 holdings? Compared to the Russell 3000 or the Wilshire 5000?

And is VXUS really "total international stock market" when it has half the holdings of VEA (Vanguard Developed Markets)? 909-1827

I'm trying to get on board with the 3-fund portfolio. But these "total market" funds seem limited to me. VTI is basically the S&P 500 with some mid cap and a little bit of small caps. VXUS is basically VEA with more large caps and more emerging markets. Or at least it seems that way to me.

Good funds? Absolutely. But I'm not convinced (yet) they're good enough by themselves. I guess that's where the "tilt" comes in for some people. Maybe I'm overthinking it. I've got VEA (Developed Markets), VWO (Emerging Markets), and VSS (small caps ex-US) for international. I've got VOO (S&P 500) and VIOO (S&P 600) for US (and a couple of value funds).

How much of the value of the 3-fund is actual growth (with minimal volatility) vs things like simplicity, tax-efficiency, ease of rebalancing, etc.? I'm not denying that those things have value. Just that, for me at this point in my life, growth is more important.
Idk about ETF but my mutual funds total approximately 10K companies - good enough for me

hazlitt
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by hazlitt » Wed Feb 14, 2018 10:17 pm

Well, then big egg on my face. I was looking at www.etfdb.com.

I don't know how to insert images, but here are the links. Am I missing something?

http://etfdb.com/etf/VTI/#holdings
http://etfdb.com/etf/VXUS/#holdings

Dominic
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by Dominic » Wed Feb 14, 2018 10:17 pm

RRAAYY3 wrote:
Wed Feb 14, 2018 10:15 pm
hazlitt wrote:
Wed Feb 14, 2018 10:05 pm
Is VTI really "total stock market" with only only 1478 holdings? Compared to the Russell 3000 or the Wilshire 5000?

And is VXUS really "total international stock market" when it has half the holdings of VEA (Vanguard Developed Markets)? 909-1827

I'm trying to get on board with the 3-fund portfolio. But these "total market" funds seem limited to me. VTI is basically the S&P 500 with some mid cap and a little bit of small caps. VXUS is basically VEA with more large caps and more emerging markets. Or at least it seems that way to me.

Good funds? Absolutely. But I'm not convinced (yet) they're good enough by themselves. I guess that's where the "tilt" comes in for some people. Maybe I'm overthinking it. I've got VEA (Developed Markets), VWO (Emerging Markets), and VSS (small caps ex-US) for international. I've got VOO (S&P 500) and VIOO (S&P 600) for US (and a couple of value funds).

How much of the value of the 3-fund is actual growth (with minimal volatility) vs things like simplicity, tax-efficiency, ease of rebalancing, etc.? I'm not denying that those things have value. Just that, for me at this point in my life, growth is more important.
Idk about ETF but my mutual funds total approximately 10K companies - good enough for me
If they're Vanguard mutual funds, the ETFs are just a share class of the mutual funds, and the holdings are identical.

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by Outafter20 » Wed Feb 14, 2018 10:18 pm

hazlitt wrote:
Wed Feb 14, 2018 10:17 pm
Well, then big egg on my face. I was looking at www.etfdb.com.

I don't know how to insert images, but here are the links. Am I missing something?

http://etfdb.com/etf/VTI/#holdings
http://etfdb.com/etf/VXUS/#holdings
I have used www.etfdb.com before and I find then to be inaccurate.

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by denovo » Thu Feb 15, 2018 4:57 am

hazlitt wrote:
Wed Feb 14, 2018 10:17 pm
Well, then big egg on my face. I was looking at www.etfdb.com.

I don't know how to insert images, but here are the links. Am I missing something?

http://etfdb.com/etf/VTI/#holdings
http://etfdb.com/etf/VXUS/#holdings
Primary sources are generally more accurate than secondary sources like databases.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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nisiprius
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by nisiprius » Thu Feb 15, 2018 8:10 am

I agree on going to the source for anything you actually care about (i.e. well before making any transaction).

I agree that etfdb isn't reliable; I can't even imagine where they could have gotten numbers like those.

I find Morningstar to be reasonably reliable. The three biggest issues with Morningstar that I've noticed about are, first, that they add up total assets for a fund or ETF in a different way from Vanguard and I can never remember what the difference is; second, that Morningstar's basic asset allocation breakdown is reliable for long-only funds (almost all of Vanguard's) but can be crazy and insanely wrong for funds that use derivatives; and, third, that classifications of countries as "developed markets" or "emerging markets" are arbitrary, and Morningstar uses a different one than Vanguard, and thus gets different developed/emerging breakdowns.

Notice that Morningstar's numbers for stock holdings are reasonably in accord with Vanguard's: 3,620 for VTI, 6,101 for VXUS. I'm not personally interesting in trying to resolve the discrepancy.

Image
Image

Finally, Vanguard sort of set themselves up for it by using the word "Total" as a kind of marketing term, but I also feel people are sometimes a little too gleeful at taking cheap shots at Vanguard for it.

I notice that iShares is happy enough say that their ACWX ETF provides "Exposure to a broad range of international developed and emerging market companies" and "Access to the global stock market (excluding the U.S.) in a single fund," with only 1,210 stocks. (Because it doesn't include small-caps, probably).

Image

And it's easy to overestimate the differences and the degree of diversification involved when you start getting down to the small-caps, because in reality, this is what the difference between VTI with 6,000 stocks (blue) and ACWX with 1,200 (orange) would have actually amounted to:

Source

Image
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rgs92
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by rgs92 » Thu Feb 15, 2018 8:16 am

John Bogle always says that even just the S&P500 "gives you the weight of the market" and that's all you need.

david1082b
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by david1082b » Thu Feb 15, 2018 8:24 am

This is a big list on Vanguard of all their mutual funds so you can look at details from the 20-ton elephant's mouth: https://investor.vanguard.com/mutual-fu ... nd-returns

ETFs: https://investor.vanguard.com/mutual-fu ... nd-returns

Penny stocks/OTCBB stocks are not included in these total market funds, they are considered non-viable investments generally. So there will never be a genuine "total stock market" index fund. "Total bond market" index funds often don't include high-yield or muni bonds; these are considered more investible, but don't get included for various reasons, tax complications may be one for munis.

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by jhfenton » Thu Feb 15, 2018 8:26 am

nisiprius wrote:
Thu Feb 15, 2018 8:10 am
I agree that etfdb isn't reliable; I can't even imagine where they could have gotten numbers like those.
My first guess was right. The 1,478 comes from the PCF (Portfolio Composition File) for VTI. There are 1,478 stocks that you have to assemble to create a new block of VTI.

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by grabiner » Thu Feb 15, 2018 9:08 pm

The number of holdings isn't particularly relevant. If there are ten small stocks in a particular industry which combine to make 0.1% of the portfolio, your return won't be affected much if the fund chooses to hold 0.1% in only one of those ten, rather than 0.01% in each of them as a true index would. Many index funds use this type of sampling when the index holds small stocks. (Bond indexes have similar issues because each issuer issues multiple bonds; a fund might hold a particular corporation's 8-year bonds rather than an equal amount in all five years of 6-10 year bonds.)
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by LazyNihilist » Fri Jun 01, 2018 6:53 pm

I was trying to find the differences in holdings between Total US, Total International and Total World Funds/ETF's and was quite surprised to hear about the Portfolio Composition File.

https://investor.vanguard.com/etf/profi ... io/VTI/pcf (1490 instead of 3629)
https://investor.vanguard.com/etf/profi ... o/VXUS/pcf (905 instead of 6327)
https://investor.vanguard.com/etf/profi ... lio/VT/pcf (859 instead of 8099)

Looks like the Total Stock Market has approx. 1475-1490 holdings 'only'.

How do fund managers decide which funds should be in the PCF? Is this some minor active management and unavoidable?
I hope the tracking error is low for these 3 great funds.
The strong do what they can and the weak suffer what they must -Thucydides

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Epsilon Delta
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by Epsilon Delta » Fri Jun 01, 2018 7:05 pm

LazyNihilist wrote:
Fri Jun 01, 2018 6:53 pm
I was trying to find the differences in holdings between Total US, Total International and Total World Funds/ETF's and was quite surprised to hear about the Portfolio Composition File.

https://investor.vanguard.com/etf/profi ... io/VTI/pcf (1490 instead of 3629)
https://investor.vanguard.com/etf/profi ... o/VXUS/pcf (905 instead of 6327)
https://investor.vanguard.com/etf/profi ... lio/VT/pcf (859 instead of 8099)

Looks like the Total Stock Market has approx. 1475-1490 holdings 'only'.

How do fund managers decide which funds should be in the PCF? Is this some minor active management and unavoidable?
I hope the tracking error is low for these 3 great funds.
As has already been mentioned in this thread those are the listings of stocks in a creation unit, not the list of holdings. The list of holdings can be found in the annual reports. They are at least fairly close to the counts for the index (there are also some derivatives such as SPDRs in the complete list and I'm not willing to go through both lists to verify an exact match).

FWIW I believe the cut off in creation units v. holdings is a about where a company drop below 0.05% of the holdings.

For broad based funds if a creation unit contained every stock they held then the the smaller companies would be represented by tiny fractions of a share, which is not practical. I'd guess that Vanguard uses money received for the mutual funds sales and reinvested dividends to buy the smaller companies. That is active in the sense that they are buying and selling, but it would be passive stock selection, and akin to how traditional passive mutual funds have always worked.

Vanguard could also alter the creation units from time to time so the smaller companies are randomly included a few at a time, but that would require Vanguard to guess whether creation units would be bought or sold (or rely on the law of large numbers, for numbers that are not that large.)

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JoMoney
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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by JoMoney » Sat Jun 02, 2018 12:04 am

In addition to the annual reports, complete and accurate list of holdings (for any fund) can be obtained in the quarterly N-Q "Quarterly Schedule of portfolio holdings of management investment companies" filed with the SEC
http://www.sec.gov/edgar/searchedgar/mutualsearch.html

Vanguard Total Stock Market Index Fund As of March 31, 2018

You might also find it interesting to read how the fund utilizes swap contracts and index futures of S&P 500, S&P 400, and Russell 2000 to simulate full investment in the market while managing inflows-outflows.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by talzara » Sat Jun 02, 2018 11:46 am

Epsilon Delta wrote:
Fri Jun 01, 2018 7:05 pm
For broad based funds if a creation unit contained every stock they held then the the smaller companies would be represented by tiny fractions of a share, which is not practical. I'd guess that Vanguard uses money received for the mutual funds sales and reinvested dividends to buy the smaller companies. That is active in the sense that they are buying and selling, but it would be passive stock selection, and akin to how traditional passive mutual funds have always worked.
It doesn't have to.

Vanguard ETFs are share classes of the mutual fund. If the ETF is seeing net inflows, then the Admiral and Investor shares are probably also seeing inflows. Vanguard can simply buy the missing stocks on the mutual fund side, overweighting them to offset the 0 weighting in the ETF creation basket.

It's inefficient for an authorized participant to turn in 0.7 shares of a small cap stock. However, Vanguard can aggregate all of the purchases and buy 700 shares.

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Re: Is VTI really "total stock market" with only 1478 holdings?

Post by LazyNihilist » Sat Jun 02, 2018 10:30 pm

Epsilon Delta wrote:
Fri Jun 01, 2018 7:05 pm
LazyNihilist wrote:
Fri Jun 01, 2018 6:53 pm
I was trying to find the differences in holdings between Total US, Total International and Total World Funds/ETF's and was quite surprised to hear about the Portfolio Composition File.

https://investor.vanguard.com/etf/profi ... io/VTI/pcf (1490 instead of 3629)
https://investor.vanguard.com/etf/profi ... o/VXUS/pcf (905 instead of 6327)
https://investor.vanguard.com/etf/profi ... lio/VT/pcf (859 instead of 8099)

Looks like the Total Stock Market has approx. 1475-1490 holdings 'only'.

How do fund managers decide which funds should be in the PCF? Is this some minor active management and unavoidable?
I hope the tracking error is low for these 3 great funds.
As has already been mentioned in this thread those are the listings of stocks in a creation unit, not the list of holdings. The list of holdings can be found in the annual reports. They are at least fairly close to the counts for the index (there are also some derivatives such as SPDRs in the complete list and I'm not willing to go through both lists to verify an exact match).

FWIW I believe the cut off in creation units v. holdings is a about where a company drop below 0.05% of the holdings.

For broad based funds if a creation unit contained every stock they held then the the smaller companies would be represented by tiny fractions of a share, which is not practical. I'd guess that Vanguard uses money received for the mutual funds sales and reinvested dividends to buy the smaller companies. That is active in the sense that they are buying and selling, but it would be passive stock selection, and akin to how traditional passive mutual funds have always worked.

Vanguard could also alter the creation units from time to time so the smaller companies are randomly included a few at a time, but that would require Vanguard to guess whether creation units would be bought or sold (or rely on the law of large numbers, for numbers that are not that large.)
Thanks for the clarification Epsilon Delta.
The strong do what they can and the weak suffer what they must -Thucydides

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