A seven-figure VOO balance sounds like a retirement paycheck until you do the actual math on what it deposits each month, then realize covering the rest means a tax bill your fund prospectus quietly ignores.
Buying two broad Vanguard index funds feels like spreading your risk across the market, but the holdings inside each fund tell a very different story about where your money actually ends up.
VOO and IVV charge the same fee and track the same index, yet the plumbing underneath each fund runs on completely different mechanics that can quietly favor one type of investor over another.
The Vanguard S&P 500 ETF (VOO) is firing on all cylinders this year, and is leaving other top competitors behind. VOO & Chill is driving record inflows The fund, which tracks the blue-chip S&P 500 Index, has continued adding assets at the fastest pace ever recorded.
Investors funneled $43.6 billion into the Vanguard S&P 500 ETF (NYSEARCA:VOO) over the trailing thirty days, according to Eric Balchunas at Bloomberg, even as pundits filled the airwaves with warnings about an overdue selloff.
The S&P 500 Index and its ETFs, like VOO and SPY have moved sideways this month and are hovering slightly below their record highs. This consolidation, however, may turn into a calm before the storm ahead of a major comeback as evidenced by some major numbers, including its valuation and earnings growth.
The S&P 500 encompasses 500 of America's biggest companies. Together, they represent about 80% of the U.S. stock market's value.
I've owned Vanguard 500 Index ETF and Invesco QQQ Trust ETF for years, now 30% and 15% of my portfolio, respectively, but I no longer sleep well with capital parked there. The 19.6x forward P/E looks fine, yet Shiller's CAPE at 42.38x is the second highest since 2000.
SpaceX is now publicly traded and sitting just outside the reach of the world's largest ETF, and the rulebook keeping it out raises real questions about what VOO holders should do while they wait.
When everyone indexes, what is the market?
As the month of August came to a close, the first index mutual fund got to celebrate a key milestone. The mutual fund in question is the Vanguard 500 Index Fund (VFINX), which originally launched on August 31, 1976.
Over the past 100 years, the S&P 500 has generated an average annual return of roughly 10%. If the index can achieve that over the next 20 years, investors would see their money grow by nearly six times.