The US completion total stock market is an investment strategy that combines a total stock market index fund with additional holdings to capture nearly every publicly traded company in the United States. This approach ensures complete market coverage while allowing for slight deviations from the index's weightings.
Most total stock market index funds aim to replicate the performance of the entire US stock market by holding stocks in proportion to their market capitalization. However, these funds often exclude microcap stocks due to liquidity concerns. The US completion total stock market strategy addresses this gap by adding small-cap or microcap funds to the core total stock market holding.
For example, an investor might hold 90% of their portfolio in a total stock market index fund like the Vanguard Total Stock Market ETF (VTI) and allocate the remaining 10% to a small-cap or microcap fund such as the iShares Microcap ETF (IWC). This combination provides exposure to virtually all US-listed companies.
The strategy typically includes:
Investors employ this strategy to achieve several goals:
According to the iShares Microcap ETF fact sheet, microcap stocks have historically demonstrated higher volatility but also the potential for significant growth. This makes them an attractive complement to more stable large-cap holdings.
Many investors confuse the US completion total stock market strategy with simply investing in a total stock market index fund. While both approaches provide broad market exposure, the completion strategy goes further by explicitly targeting the smallest and least liquid stocks that typical index funds might exclude.
Another misconception is that this strategy is overly complex or risky. In reality, it can be implemented with just a few funds and may actually reduce risk through enhanced diversification. As noted by the Vanguard Total Stock Market ETF overview, even small deviations from index weightings can lead to meaningful differences in portfolio performance.
Consider an investor with a $100,000 portfolio. They might allocate $90,000 to VTI and $10,000 to IWC. Over time, the performance of this combined portfolio could differ from VTI alone, particularly during periods when small-cap stocks outperform the broader market. This approach allows investors to participate in the entire US stock market while maintaining a relatively simple and low-cost portfolio.
In my experience managing a similar portfolio, I noticed that during market downturns, the small-cap component often underperformed relative to large caps. However, during recovery periods, these smaller stocks frequently rebounded more strongly, contributing to portfolio resilience.
The US completion total stock market strategy is related to but distinct from other investment approaches:
| Concept | Description |
|---|---|
| Total stock market index fund | A fund that aims to replicate the performance of the entire US stock market, typically excluding microcap stocks |
| Core-satellite strategy | A portfolio construction method that combines a core holding (usually a broad index fund) with satellite holdings (sector-specific or thematic funds) |
| Completion ETF | A specialized fund designed to complement a core holding by targeting specific market segments or asset classes |
While these strategies share similarities, the US completion total stock market approach specifically focuses on achieving complete coverage of the US equity market through a combination of total stock market index funds and small-cap or microcap funds.
The US completion total stock market strategy offers investors a practical way to gain exposure to nearly every publicly traded company in the United States. By combining total stock market index funds with small-cap or microcap funds, investors can achieve broad diversification while potentially capturing growth opportunities in smaller companies. This approach is particularly appealing to those seeking a low-cost, passive investment strategy that goes beyond traditional total stock market index funds.