The Vanguard 500 Index Fund Is Great, But Another Vanguard ETF Has Outperformed It the Past Decade
The Vanguard 500 Index ETF (NYSEMKT: VOO) is one of the most popular ETFs (exchange-traded funds), and for good reason. Vanguard made a name for itself by offering low-cost index mutual funds and later expanded its popular offerings to ETFs. The nice advantage ETFs have over mutual funds is that they allow for intraday trading.
The Vanguard 500 Index ETF is designed to mimic the performance of the S&P 500, which tracks the performance of the 500 largest companies in the U.S. The index is market-cap-weighted, which means that the bigger the company, the larger the position the stock has in the index. The index will also adjust for a company's float, so only shares that are available to the public are counted when calculating a company's size.
The Vanguard 500 Index Fund ETF is a great introduction to investing for many people. The ETF gives investors instant diversification into the largest companies that trade in the U.S. at a low expense ratio of 0.03%.
Source Fool.com
