VTSAX: what is in it?VTSAX is the famous Vanguard index fund that a LOT of the FIRE community recommends, including JL Collins, author of the Simple Path to Wealth. The entire Financial Independence community has got behind the simple index fund and it has become one of the most powerful wealth-building funds. But what actually is VTSAX? What is it made up of? When you buy it what are you actually getting?
If you want to know what an index fund is before we get started, read this article or watch our YouTube video. If you are not from the USA that article talks about different funds that might be available to you. |
Alan and Katie explain what an index fund is in 6 minutes 14 seconds on YouTube.
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VTSAX in chart form
My incredible wife Katie got inspired by the data and went off and started to use Tableau (data visualisation tool) to try and show what index funds actually are. We have been running Rebel Finance School for 3 years and always struggled to describe with words what index funds are. As soon as Katie made these visualisations people started to understand at a far deeper level what they were investing in and become far more confident and comfortable with their investments.
Make sure you keep going all the way to the end of the page to see all the visualisations Katie has created. One of the coolest things she's made is a State dashboard. You can put the State you are from into the form, and it will show you what percentage of VTSAX is from that State and what the companies are.
The diagram below shows you exactly what VTSAX is made up of. There are 4,068 companies in the fund as of 30 June 2022 and each one is represented by a box on the diagram below. This works best full screen on a laptop or computer. If you are on your phone break out the laptop to get the best view!
As you hover your cursor over the diagram a dialogue box will pop up and show you the company name and percentage of VTSAX that it makes up. You can see exactly what the fund is made up of and how your money is split between companies.
Make sure you keep going all the way to the end of the page to see all the visualisations Katie has created. One of the coolest things she's made is a State dashboard. You can put the State you are from into the form, and it will show you what percentage of VTSAX is from that State and what the companies are.
The diagram below shows you exactly what VTSAX is made up of. There are 4,068 companies in the fund as of 30 June 2022 and each one is represented by a box on the diagram below. This works best full screen on a laptop or computer. If you are on your phone break out the laptop to get the best view!
As you hover your cursor over the diagram a dialogue box will pop up and show you the company name and percentage of VTSAX that it makes up. You can see exactly what the fund is made up of and how your money is split between companies.
The colours in the chart above represent each of the industry sectors and then how they are broken down by company within that. The red in the top left corner is the technology sector and you can see that it is dominated by Apple, Microsoft and Alphabet (Google).
If you were to invest $100 into VTSAX you would end up owning $5.62 of Apple stock, $5.13 of Microsoft stock and $3.31 of Google stock. Have fun scrolling around the chart above so you can see exactly what it is made up of!
If you were to invest $100 into VTSAX you would end up owning $5.62 of Apple stock, $5.13 of Microsoft stock and $3.31 of Google stock. Have fun scrolling around the chart above so you can see exactly what it is made up of!
Dominance of the top companies
There are 4,068 companies in VTSAX as at 30 June 2022. That's a lot of companies. But not all companies are created equal! Companies are weighted in the index according to their size. For example, the top ten companies make up 22.9% of the fund. So when you invest $100 in the fund, $22.90 of your money is invested in these ten companies.
The chart below illustrates this dominance. The bubble chart on the left shows the companies in the fund before they are weighted and each bubble represents one company. The companies in blue are the top ten companies. The bubble chart on the right shows the companies in the fund after they are weighted by size. Again, the blue companies are the top ten companies and you can see how much of the fund they make up. Hover over the bubbles to see more info!
Is this dominance a bad thing?! No! The fund is weighted towards the most profitable and dominant companies and you get to enjoy their success because you are invested in them. As companies rise and fall in dominance and success, their weighting in the index changes. This is not something you have to predict or worry about, the index automatically re-weights and this is part of the natural process!
Another example... the top 64 companies make up 50% of the fund. Yes that's right, only 64 of the 4,068 companies account for half of VTSAX. When you invest $100, 50 of those dollars are invested in just 64 companies. You can see this for yourself by changing the "How many companies are you interested in?" to 64.
Feel free to have a play and change the number of companies and see how much of the fund they make up!
The chart below illustrates this dominance. The bubble chart on the left shows the companies in the fund before they are weighted and each bubble represents one company. The companies in blue are the top ten companies. The bubble chart on the right shows the companies in the fund after they are weighted by size. Again, the blue companies are the top ten companies and you can see how much of the fund they make up. Hover over the bubbles to see more info!
Is this dominance a bad thing?! No! The fund is weighted towards the most profitable and dominant companies and you get to enjoy their success because you are invested in them. As companies rise and fall in dominance and success, their weighting in the index changes. This is not something you have to predict or worry about, the index automatically re-weights and this is part of the natural process!
Another example... the top 64 companies make up 50% of the fund. Yes that's right, only 64 of the 4,068 companies account for half of VTSAX. When you invest $100, 50 of those dollars are invested in just 64 companies. You can see this for yourself by changing the "How many companies are you interested in?" to 64.
Feel free to have a play and change the number of companies and see how much of the fund they make up!
Tech Dominance in the VTSAX top 10
The largest industries change over time. Back in the 80s it was energy, then finance had its time and at the moment it is technology. The wonderful thing about index funds is that as industries grow and shrink the index automatically changes to reflect that.
As we are writing this article, technology is the largest sector and it makes up 2/3 of the top 10 largest companies by weighting. The chart below shows what industry sectors the top 10 companies are in.
We believe that you want your money split by industry weighting so that your money is invested in a broad range of industries and weighted towards the most profitable which is currently technology. You wouldn't have wanted all your money invested in Airlines in 2020!
As we are writing this article, technology is the largest sector and it makes up 2/3 of the top 10 largest companies by weighting. The chart below shows what industry sectors the top 10 companies are in.
We believe that you want your money split by industry weighting so that your money is invested in a broad range of industries and weighted towards the most profitable which is currently technology. You wouldn't have wanted all your money invested in Airlines in 2020!
Industry Split
This chart simply shows the weighting of the fund by industry. Each industry has a different colour so you can see the top left-hand box is technology which is 25.2% of the fund. If you invested $100 into VTSAX $25.20 would go to buying technology stock and only $2.60 goes to buying companies in the Basic Materials industry (companies that deal with raw materials).
State Dashboard
Which State do you live in? Which State are you from? Do you know how many of the 4,068 companies in VTSAX are in your State and which industries those companies are in?
Katie has created a VTSAX by State dashboard. You can select which State you want to look at from the drop-down box at the top and the dashboard will show you what percentage of VTSAX is headquartered in that State, the number of companies, the top 10 companies in that State and the industry split by weighting.
It is the geekiest FI dashboard ever. Choose your state from the drop-down menu here:
Katie has created a VTSAX by State dashboard. You can select which State you want to look at from the drop-down box at the top and the dashboard will show you what percentage of VTSAX is headquartered in that State, the number of companies, the top 10 companies in that State and the industry split by weighting.
It is the geekiest FI dashboard ever. Choose your state from the drop-down menu here:
Non-USA headquarters
Not all companies in VTSAX are headquartered in the USA! Can you believe it? No, we didn't either but as we dived into the data, we found that 72 companies are headquartered in different countries! These companies account for 2.9% of VTSAX by weighting, so not a massive chunk but interesting to see where these foreign companies hail from!
9 are in the UK (go on the UK!), 9 are in Canada and 1 is in Thailand! Who knew VTSAX was actually so global! The map below is interactive, click on the country you're interested in to see which companies are headquartered there. Then press ESC to go back to the whole map and choose a different country.
Have fun playing with the map to find out where VTSAX's companies are headquartered!
9 are in the UK (go on the UK!), 9 are in Canada and 1 is in Thailand! Who knew VTSAX was actually so global! The map below is interactive, click on the country you're interested in to see which companies are headquartered there. Then press ESC to go back to the whole map and choose a different country.
Have fun playing with the map to find out where VTSAX's companies are headquartered!
That's it for now! We are planning lots more, but we would also LOVE to hear from you. What did you like? What confused you? What would you want us to show if we added more? Please contact us and tell us your thoughts!
More coming.....
We are planning a whole set of charts to help you see and understand index funds and VTSAX. Sign up to our mailing list and follow us on social media to keep up to date!
Who is Katie Donegan?
Actual photo of Katie Donegan analysing data in Argentina.
Are you curious who made all these graphs?
Katie trained as an actuary and fell in love with data and visualising it! After retiring from her corporate job at 33 years old he started to learn how to use Tableau and other data visualisation tools to properly understand where the Donegan investments where!
This led to a series of articles and charts all about Vanguard Index funds and tools like the retirement calculator, property return calculator and many more! Find out more about Katie Donegan here
We have a lot of fun creating these charts for you and always love to know what you think. If you have been inspired, got suggestions or want to know more you can contact Katie and Alan through this page
Katie trained as an actuary and fell in love with data and visualising it! After retiring from her corporate job at 33 years old he started to learn how to use Tableau and other data visualisation tools to properly understand where the Donegan investments where!
This led to a series of articles and charts all about Vanguard Index funds and tools like the retirement calculator, property return calculator and many more! Find out more about Katie Donegan here
We have a lot of fun creating these charts for you and always love to know what you think. If you have been inspired, got suggestions or want to know more you can contact Katie and Alan through this page
Find the Donegans on Social
You can find the Rebel Entrepeneur podcast on Spotify, our financial independence videos and courses on YouTube and the new Donegans socials on Instagram and Facebook where we will be sharing our articles and resources.
