A total stock market index fund is a mutual fund or exchange-traded fund (ETF) that tracks an equity index such as the Russell 3000 Index, the S&P 500, or the Wilshire 5000 Total Market Index, as its benchmark. By investing in stocks linked to a given index, a total market index fund's performance aims to mirror that of the index in question.

The underlying stocks that these types of funds invest in are often highly diverse and may include both large-cap stocks issued by well-known corporations, as well as small-cap stocks issued by lesser-known companies.

Below are four of today's most prominent ones. Total assets, Morningstar rating, and expense ratio figures are current as of December 2020.

Key Takeaways

  • Total market index funds track the stocks of a given equity index.
  • The major broad-based indexes used as benchmarks are the Russell 3000, the S&P 500, and the Wilshire 5000 Total Market Index.
  • The best total market index funds by popularity include the Vanguard Total Stock Market Index (VTSMX), the Schwab Total Stock Market Index Fund (SWTSX), the iShares Russell 3000 (IWVB), and the Wilshire 5000 Index Investment Fund (WFIVX).

Vanguard Total Stock Market Index (VTSMX)

The Vanguard Total Stock Market Index (VTSMX) seeks to track the investment results of the CRSP U.S. Total Market Index, comprising approximately 100% of the investable U.S. stock market. Its companies, which represent a cross-section of market capitalizations, primarily trade on the New York Stock Exchange and NASDAQ.

Technology companies account for the largest share of VTSMX's portfolio, at 23.44%. Healthcare companies have a 14.54% allocation, while financial services have 12.55%. Consumer cyclical and industrial companies round out the top five sectors, with 12.06% and 9.21% allocations, respectively.

The Vanguard Total Stock Market Index is considered a large-cap blend, evidenced by its top five holdings: Apple, Inc., Microsoft Corp., Amazon.com, Facebook Inc A, and Alphabet Inc A. In fact, 23% of VTSMX's assets lie within its top 10 holdings.

  • Assets under management: $194.1 billion
  • 2019 return: 30.65%
  • Expense ratio: 0.14%
  • Morningstar rating: 4 stars

Schwab Total Stock Market Index (SWTSX)

The Schwab Total Stock Market Index (SWTSX) tracks the total return of the entire U.S. equity market as measured by the Dow Jones U.S. Total Stock Market Index. SWTSX currently focuses on technology (23.81% allocation), healthcare (14.39%), financial services (12.58%), cyclical consumer (12.05%), and communication services (10.54%).

Almost identical to the aforementioned Vanguard Total Stock Market Index fund, SWTSX's top holdings are in Microsoft, Apple, Amazon, Facebook Inc A, and Berkshire Hathaway Inc B, with also its top 10 holdings comprising 23% of the portfolio.

  • Assets under management: $13.3 billion
  • 2019 return: 30.88%
  • Expense ratio: 0.03%
  • Morningstar rating: 4 stars

iShares Russell 3000 ETF (IWV)

The iShares Russell 3000 (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 to select a sample of stocks that represent the underlying benchmark. IWV's sector allocations and top holdings are similar to those of the Vanguard and Schwab funds.

IWV is led by investments allocated 23.76% in technology, 14.01% in healthcare, 13.04% in financial services, and 12.06% in consumer cyclical. Similar to the previous two funds, it also has 23% of its assets weighted in its top 10 holdings, including Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc. A.

  • Assets under management: $10.6 billion
  • 2019 return: 30.78%
  • Expense ratio: 0.20%
  • Morningstar rating: 4 stars

Small stocks listed in a total market index fund are often thinly traded, which may result in high trading spreads and significant transaction costs.

Wilshire 5000 Index Investment Fund (WFIVX)

The Wilshire 5000 Index Investment Fund (WFIVX) is a mutual fund that tracks the investment results of the Wilshire 5000 Index, a capitalization-weighted index of the market value of all actively traded U.S.-headquartered stocks.

While the index consists of around 3,115 companies, the fund typically holds 1,000 to 2,500 stocks. The fund emphasizes large market-cap companies with market values greater than $10 billion.

Like the other funds on the list, WFIVX targets technology, financial services, healthcare, consumer cyclical, and industrial sectors, though its top ten holdings comprise 26% of its portfolio. Unlike the other funds, WFIVX alone includes Alphabet Inc Class C in its top quintet of stock holdings.

  • Assets under management: $211.9 million
  • 2019 return: 29.74%
  • Expense ratio: 0.63%
  • Morningstar rating: 3 stars
Comparing 4 Total Stock Market Index Funds
Total Stock Market Index Fund Assets Under Management 2019 Return Expense Ratio Morningstar Rating
Vanguard Total Stock Market Index (VTSMX) $194.1 billion 30.65% 0.14% 4 stars
Schwab Total Stock Market Index (SWTSX) $13.3 billion 30.88% 0.03% 4 stars
iShares Russell 3000 ETF (IWV) $10.6 billion 30.78% 0.20% 4 stars
Wilshire 5000 Index Investment Fund (WFIVX) $211.9 million 29.74% 0.63% 3 stars

Total Stock Market Funds FAQs

What Is a Total Stock Market Index Fund?

A total stock market index fund is a mutual fund or exchange-traded fund (ETF) that tracks an equity index such as the Russell 3000 Index, the S&P 500, or the Wilshire 5000 Total Market Index, as its benchmark.

How Many Stocks Are in the Vanguard Total Stock Market Index Fund?

The Vanguard Total Stock Market Index Fund has a total of 3,576 equity holdings in stocks, two in bonds, and 13 in other holdings.

How Do I Invest in a Total Market Index Fund?

Investors can easily invest in a total market index fund by purchasing shares of ETFs including the Vanguard Total Stock Market Index (VTSMX), the Schwab Total Stock Market Index Fund (SWTSX), the iShares Russell 3000 (IWVB), and the Wilshire 5000 Index Investment Fund (WFIVX).

What Companies Are in the Vanguard Total Stock Market Index Fund?

With more than 23% of its portfolio invested in the technology sector, companies in the Vanguard Total Stock Market Index Fund (VTSMX) include Apple, Inc., Microsoft Corp., Amazon.com, Facebook Inc A, and Alphabet Inc A.