Happy birthday, Vanguard Total Stock Market ETF (VTI)! You were born on May 24, 2001, to the Vanguard Total Stock Market Index parent fund. At the time, you were just a $40 million share class of your $24 billion parent, which was the second largest mutual fund in the world. We weren’t sure of your future, and we certainly had no idea what you would grow to be. We just knew you were another way for investors to get access to a low-cost, broadly diversified portfolio. You were our first and only exchange-traded fund (ETF), but not for long. Later that same year, you would be joined by your first sibling, the Vanguard Extended Market ETF (VXF).
You gathered your first billion dollars by the time you were six months old. And while other six-month-olds were crawling and babbling cute baby talk, you were providing investors access to a professionally managed, broadly diversified portfolio of over 3,000 stocks for only 15 basis points.
In 2004, when you were just three years old, you passed another important milestone in the life of any Vanguard fund: Your expense ratio dropped. This first reduction was modest, only 2 basis points, but it would be the first in a succession. As you grew to $6 billion by your fourth birthday in 2005 (and your parent fund had grown to $66 billion), your expense ratio fell from 13 basis points to 7, and you could offer institutional quality, passive management, and low fees to any investor with a brokerage account.
But you were still growing fast, and in 2007, at age 6, when most children are starting first grade, you were approaching $10 billion in assets under management. I’m sure you remember 2008; it was a tumultuous year in the markets, and you flirted with the $10 billion mark all year long, crossing back and forth across this important milestone many times until May 2009 when you hit $10 billion without looking back. You were eight years old and growing rapidly as the markets recovered from the Great Recession and clients continued to be attracted to your value proposition.
You hit many other important milestones along the way, including when your expense ratio fell to 5 basis points in 2011, the same year you grew to $20 billion. By the end of 2014, you had grown to $50 billion and your parent fund was up to $380 billion and would cross $400 billion a few months later in February 2015.
And now here we are. Almost halfway through 2016, as you approach your 15th birthday, you have grown to a $59 billion share class of the $418 billion Vanguard Total Stock Market Index Fund, the world’s largest mutual fund. As the ETF landscape is saturated with more and more niche products, you’ve continued to grow and provide investors diverse exposure across the entire U.S. stock market. So, happy 15th birthday, VTI—you’ve accomplished so much since 2001…and you don’t even have your driver’s license yet.
I would like to thank my colleague Tim Thornton for his contributions to this blog.
Notes: All investing is subject to risk, including the possible loss of the money you invest.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.