What is VTSAX?

VTSAX stands for Vanguard's Total Stock Market Index Fund. It is a mutual fund that invests in virtually every publicly traded company in the United States, encompassing about 3600 companies. The idea is to capture the broad market performance, including large-cap, mid-cap, and small-cap companies. This approach provides diversification and reduces the risk of any single company's performance significantly impacting the overall investment 1.

One of the key features of VTSAX is its "self-cleansing" nature. This means that poorly performing companies will eventually drop out of the index as new, more promising companies are added. This process helps maintain the fund's overall performance without the need for investors to manually manage their holdings 2.

VTSAX is also cap-weighted, meaning that a higher proportion of the fund is invested in larger companies. About 80% of VTSAX's holdings are in the S&P 500 companies, with the remaining 20% in mid-cap and small-cap stocks. This weighting helps balance stability and potential for growth 1.

If you're looking to invest in VTSAX but don't have the $3,000 minimum required for the Admiral Shares, you can consider its ETF counterpart, VTI. VTI is essentially the same as VTSAX but doesn't require a minimum investment and offers the flexibility to buy fractional shares 3.