Vanguard's Index Fund Beats Picking Winners

The S&P 500 has provided an average annual return of about 11% since 1958. However, the companies within this index have changed significantly over time.

In 1996, the largest holdings in the S&P 500 by market capitalization were Coca-Cola, ExxonMobil, Intel, Microsoft, General Electric, Merck, International Business Machines, Procter & Gamble, Johnson & Johnson, and Walmart.

Thirty years later, all of these companies remain well-known names, but their market dominance has shifted. Only Microsoft is still among the top 10 holdings in the S&P 500.

The Vanguard Total Stock Market ETF (VTI) offers broad exposure to the US economy without trying to pick individual winners. It will naturally increase its exposure to emerging companies as they grow in size.