Investing Assets & Markets Mutual Funds Total Stock Market Index Funds: VTSAX, Plus 3 More Like It Should you buy total stock market index funds? By Kent Thune Kent Thune Twitter Kent Thune has spent more than two decades in the financial services industry and owns Atlantic Capital Investments, an investment advisory firm, in Hilton Head Island, South Carolina. He's written hundreds of articles for a range of outlets, including The Balance, Kiplinger, Marketwatch, and The Motley Fool. learn about our editorial policies Updated on January 26, 2022 Reviewed by Michael J Boyle Reviewed by Michael J Boyle Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. learn about our financial review board Fact checked by Emily Ernsberger Fact checked by Emily Ernsberger Twitter Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. learn about our editorial policies In This Article View All In This Article Total Stock Market Index Funds Benefits of Investing Which Ones are Best? The Bottom Line Frequently Asked Questions (FAQs) Photo: David Lees/Getty Images Total stock market index funds can be a great way to gain exposure to and diversity from nearly all publicly traded stocks on U.S. stock exchanges in one investment. Choosing a total stock market fund is a convenient way to invest in the most stocks possible without the expense of purchasing them all. Total Stock Market Index Fund Definition A total stock market index fund is a mutual fund or exchange-traded fund (ETF) that invests in a basket of stocks that passively tracks the performance of a broad stock market benchmark, such as the Wilshire 5000, the CRSP U.S. Total Market Index, Russell 3000, or the Dow Jones U.S. Total Stock Index. Like S&P 500 Index Funds, total stock market index funds are market-cap weighted. Stocks of companies with the largest capitalization receive higher allocation than those with mid and small capitalization. Note The top companies in these indexes include big U.S. companies like Apple (AAPL), Meta (FB), formerly Facebook, and Microsoft (MSFT). Benefits of Investing in a Total Stock Market Index Fund Here are the primary benefits of investing in a total stock index fund: Core Holding: Total stock market index funds make good core holdings in a portfolio of mutual funds. In a core-and-satellite portfolio strategy, you would invest in multiple funds, with a core that receives the highest allocation and the satellites that receive smaller allocations. Simplicity: You can gain access to nearly the entire U.S. stock market in one low-cost fund. Diversification: Total stock market index funds typically hold thousands of stocks with various market capitalizations. You can achieve diversification in one fund, because most total stock index funds hold 3,000 or more stocks. Tax Efficiency: Since index funds have very little turnover, they generally produce fewer capital gains distributions when compared to actively managed funds. That makes a total stock index fund potentially a good holding if you have a taxable brokerage account. Best Total Stock Market Index Funds Since index funds passively track a benchmark index, the best funds generally have the lowest expense ratios. This is like buying generic goods. If you are comparing two items, and they have the same ingredients, it makes more sense to buy the cheaper one. Note Total stock index funds should track an index that exposes you to thousands of U.S. stocks. With those criteria in mind, here are some of the best total stock index funds on the market: Vanguard Total Stock Market Index Admiral Shares (VTSAX): Opening to investors in 1992, VTSAX was among the first index funds to capture the total market. This fund tracks the CRSP U.S. Total Market Index. With an expense ratio of 0.04% and exposure to more than 3,500 stocks, it makes a solid core holding for a diversified mutual fund portfolio. For exposure to the same stocks and a lower expense ratio of 0.04%, you can buy the ETF version, Vanguard Total Stock Market ETF (VTI).Fidelity Total Market Index Fund (FSKAX): With an expense ratio of just 0.015%, FSKAX is currently the leader for the lowest expense ratio among total stock index funds. This mutual fund tracks the Dow Jones U.S. Total Stock Market Index, representing around 3,000 U.S. stocks.Schwab Total Stock Market Index (SWTSX): SWTSX has a low expense ratio of 0.03% for a mutual fund. The fund also tracks the Dow Jones U.S. Total Stock Market Index.iShares Russell 3000 Index Fund (IWV): With IWV, you gain access to the Russell 3000, which covers about 3,000 U.S. stocks. While the expense ratio of 0.20% for IWV is a bit higher than that of a few other total stock index funds, IWV is among the largest ETFs of its kind, with over $12 billion in assets. The Bottom Line Total stock index funds are good if you're looking for a mutual fund as a standalone investment or as a core holding in a diversified portfolio. However, you should keep in mind that although total stock index funds provide broad diversification, they still have market risk similar to that of other stock investments. Frequently Asked Questions (FAQs) What is an expense ratio? An expense ratio measures how much of a fund's assets are used for operating purposes. It reduces a fund's returns to its shareholders, so it's important to consider it when you're deciding where to invest. Actively managed funds have significantly higher expense ratios than passively managed ones. What is an ETF? An exchange-traded fund (ETF) is a security that tracks a sector, index, commodity, or other asset. ETFs are sold on a stock exchange and typically have low expense ratios, because they're passively managed. The Balance does not provide tax, investment, or financial services or advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Vanguard. "Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)." Fidelity. "Fidelity Total Market Index Fund (FSKAX)." Charles Schwab. "Schwab Total Stock Market Index Fund (SWTSX)." iShares. "iShares Russell 3000 ETF (IWV)."