One of the central ideas behind doing any Exchange Traded Fund (ETF) is the concept of diversification. In that regard, various ETFs offer different levels of diversification to the average investor; for this reason, I always caution investors to take a look under the hood and see how large percentage of given ETFs total exposure is made up of its top three to five holdings before jumping in.
It is for this reason primarily the I recommend that investors looking for solid ETF investments for long term portfolio holdings consider ETs such as the Vanguard Total Stock Market ETF (TSX:VTI).
This ETF owns absolutely everything (i.e. 3,300 stocks), tracking extremely closely to the SPY, the other fund most commonly traded approximate to the S&P 500, but including small cap companies as well. Having small-cap exposure is beneficial for long term investors as these companies tend to produce greater returns over time (albeit with higher risk), making such investments better suited to an ETF like this one.
This ETF has a rock bottom, extremely low management expense ratio of only 30 basis points (or 0.3%), which is truly incredible for the number of companies tracked in this fund.
I would highly recommend this ETF for passive and active investors alike for buying broad, diversified exposure to the overall stock market.
Invest wisely, my friends.
