Why Large Cap ETFs Should Be a Top Priority for Passive Investors

Among the many reasons investors choose to buy into exchange traded funds (ETFs), the ability to invest one’s money over time into securities which will generally follow the broader stock market, without investing a significant amount time in picking and managing such stocks (or paying someone to do so), is certainly one of the most attractive selling points of such funds.

Managing one’s money can be a very stressful and expensive ordeal (from both a time and money standpoint), so having access to low-cost ways of accomplishing basically the same thing has changed the way financial markets offer products to consumers.

While each ETF is different (some active, others index-tethered), picking the passive product that will fill the niche one is looking for is important to do. For truly passive investors looking to store away money for a decade or more, picking funds which have a higher percentage of large-cap companies (those big names you may have heard of which make up the vast majority of broader stock indices) is likely the way to go.

Large-cap funds are generally lower-cost (due to ease of trading from the fund’s perspective), and lower risk over the long-term due to the fact that larger companies tend to fail less often and provide a steadier stream of cash flows over the long term.

One such ETF investors ought to consider which would fit into this category is the Vanguard 500 Index Admiral VFIAX, a fund with a miniscule expense ratio of only 0.4%.

Invest wisely, my friends.