Total market index funds are mutual funds and exchange-traded funds that invest in stocks of companies so the funds' portfolio performances closely follow the investment results, before fees and expenses, of a certain benchmark. Examples of such benchmarks include the Russell 3000 Index, the S&P 500 Index and the Wilshire 5000 Index. Typical holdings of total market index funds include domestic U.S. stocks of major well-known corporations and smaller less-known companies. Compared to the S&P 500 Index, total stock market index funds typically contain a much wider type of stocks with smaller market capitalization on average and provide the biggest diversification within the U.S. equity market. Also, total market index funds may include very small public companies that are thinly traded, resulting in high trading spreads and significant transaction costs paid by total market index funds.

Vanguard Total Stock Market Index

The Vanguard Total Stock Market Index seeks to track the investment results of the CRSP US Total Market Index, which is composed of approximately 100% of the investable U.S. stock market and includes many companies of various market capitalization primarily traded on the New York Stock Exchange and NASDAQ.

Technology companies account for the largest share of VTSMX's portfolio with 17% allocation, while financial services companies have 15% allocation. Consumer cyclical companies have 12% allocation, and industrial companies have 11.4% allocation. About 70% of VTSMX's assets are invested in large market-cap companies. Medium companies account for 19% of the fund's portfolio, and small companies have 9% allocation. The fund's portfolio is well-diversified, and its top five holdings account for approximately 8% of total invested assets. The top 10 holdings have 13.5% allocation and include highly reputable companies such as Apple, Inc., Exxon Mobil Corporation, Johnson & Johnson, General Electric Corporation and Wells Fargo & Company.

From 2005 to 2015, VTSMX has generated an annual average return of 7.4%. As of September 2015, the fund has a four-star rating from Morningstar. It has no load fees, and its annual expense ratio stands at 0.17%. VTSMX is most appropriate for investors looking for very broad diversification and exposure to major U.S. corporations at a low expense ratio, and with emphasis on technology and the financial services sectors.

Schwab Total Stock Market Index Fund

The Schwab Total Stock Market Index Fund tracks the total return of the entire U.S. equity market as measured by the Dow Jones U.S. Total Stock Market Index. SWTSX invests in equities of technology companies with 17% allocation and health care companies with 15.4% allocation. Financial services companies account for 14.9% of the fund's assets, and consumer cyclicals companies have 12% allocation. SWTSX has the same allocation as that of the Vanguard Total Stock Market Index in terms of market size. Large market-cap stocks account for about 70% of the fund's portfolio. The top five holdings of SWTSX account for 8.5% and include Apple, Inc., Microsoft Corporation, Exxon Mobil Corporation, Johnson & Johnson and General Electric Corporation. The top 10 holdings have 13.6% allocation.

From 2005 to 2015, the fund has demonstrated an annual average return of 7.5%. As of September 2015, SWTSX has a rating of four stars from Morningstar and an expense ratio of 0.09%, with no load fees. This fund is most appropriate for investors who want to have total market exposure at the lowest possible expense and focus on technology and health care sectors of the U.S. stock market.

iShares Russell 3000

The iShares Russell 3000 (NYSEARCA: IWV) is an exchange-traded fund that tracks the performance of the Russell 3000 Index, which measures the investment results of the broad U.S. equity market. Like its peers, IWV uses an indexing approach and selects a sample of stocks that represent the underlying benchmark. IWV's portfolio is very similar to the Schwab fund. The fund invests about 70% of its assets in large market-cap companies. IWV allocates 17% of its assets to the technology sector, 15% to the health care sector, 15% to the financial sector and 12% to the consumer cyclicals sector. The top five holdings of the fund account for 8.4% of the fund's assets and include Apple, Inc., Microsoft Corporation, Exxon Mobil Corporation, Johnson & Johnson and General Electric Corporation.

From 2005 to 2015, the fund has generated an annual average return of 7.2%. IWV has a four-star rating from Morningstar. Its annual expense ratio is 0.2%, which is twice as high as that for the Schwab Total Stock Market Index fund. This fund is appropriate for investors who want to follow the Russell 3000 Index and do not mind incurring higher fees.

Wilshire 5000 Index Investment Fund

The Wilshire 5000 Index Investment Fund is a mutual fund that tracks the investment results of the Wilshire 5000 Index, which is composed of equities of companies with a wide range of market size. The fund typically holds 1,000 to 2,500 stocks with a bigger emphasis on large market-cap companies that account for 74% of the fund's portfolio. Medium market-cap companies have 18% allocation, while small companies have 8% allocation. Similarly to its peers, the fund's portfolio concentrates on the technology sector with 17% allocation. The financial sector accounts for 16% of WFIVX's portfolio, while the health care sector has 15% allocation. The top five holdings of the fund have about 9.7% allocation and include Apple, Inc., Microsoft Corporation, Google, Inc., Exxon Mobil Corporation and Wells Fargo & Company. The top 10 holdings of the fund have 15.7% allocation.

The fund has generated a slightly lower annual average rate of return of 6.6% from 2005 to 2015 when compared to its peers. It has a three-star rating from Morningstar. WFIVX has no load fees and can be purchased commission-free through multiple investment brokers platforms. WFIVX comes with a steep annual expense ratio of 0.65%, which is significantly higher when compared to mutual funds and ETFs in a similar category. WFIVX is most appropriate for investors who wish to follow the performance of the Wilshire 5000 Index with a broad diversification appeal and who do not mind high fees charged by the fund.

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