Vanguard S&P 500 ETF
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The Vanguard S&P 500 ETF (VOO) is a fund that invests in the stocks of some of the largest companies in the United States. VOO is an exchange traded fund (ETF) that tracks the S&P 500 index by owning all of the equities within the S&P 500. The S&P 500’s investment return is considered a gauge of the overall U.S. stock market.
An index is a hypothetical portfolio of stocks or investments representing a specific portion of the market or the entire market. The S&P 500 and the Dow Jones Industrial Average (DJIA) are both examples of broad-based indexes. Investors cannot invest in an index. Instead, they can invest in funds that mirror an index.
Key Takeaways
- The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 index by investing in all of the stocks in the S&P 500.
- The Vanguard S&P 500 ETF is appealing to many investors because it’s well-diversified and comprised of the equities of large U.S. corporations.
- The Vanguard S&P 500 ETF offers low fees because the fund’s management team is not actively trading, instead just mirroring the S&P 500.
Understanding the Vanguard S&P 500 ETF (VOO)
The S&P 500 represents 500 of the largest U.S. companies. The goal of the Vanguard S&P 500 ETF (VOO) is to track the returns of the S&P 500 index.
VOO appeals to investors because it’s well-diversified and is made up of equities of large corporations—called large-cap stocks. Large-cap stocks tend to be more stable with a solid track record of profitability as opposed to smaller companies. Dividends are typically cash payments paid to investors by companies as a reward for owning their company’s stock.
The broad-based, diversified portfolio of stocks within the fund can help lessen but not eliminate the risk of loss in the event of a market correction.
Fund Snapshot
Some of the key characteristics of the Vanguard S&P 500 (as of mid-2022) include: