VTI Holds Every Corner of the U.S. Market -- Including the Small-Caps Getting Hit Hardest. Is That a Problem or an Opportunity?

2 hours ago 3

David Dierking, The Motley Fool

Fri, April 17, 2026 astatine 11:50 AM CDT 5 min read

When radical look to put successful U.S. stocks, they're usually referring to the S&P 500. That means they're lone investing successful a subset of the U.S. equity market. That scale gives you vulnerability to 500 of the largest companies successful the United States, but it leaves retired astir 3,000 that aren't rather ample capable to marque the cut.

For galore years, investors didn't truly caput leaving those other 3,000 out. They've been chronic underperformers that would person been a resistance connected performance. Mega-caps, tech, and the Magnificent Seven stocks person driven the large indexes higher. Smaller, emerging companies person mostly been near behind.

Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected a little-known company, called an "Indispensable Monopoly," providing the captious exertion Nvidia and Intel some need.

Continue »

But that's the past. The adjacent 10 years whitethorn look wholly antithetic than the past 10. In fact, implicit the past 12 months, the Russell 2000, the fashionable benchmark for small-cap stocks, has beauteous steadily outperformed the S&P 500.

Because the Vanguard Total Stock Market ETF (NYSEMKT: VTI) owns the full U.S. market, including large-caps and small-caps, that means it's clip to reconsider it arsenic the amended accidental implicit the Vanguard S&P 500 ETF (NYSEMKT: VOO).

VTI holds virtually the full U.S. banal marketplace of astir 3,500 U.S. stocks, including large-, mid-, and small-caps.
About 25% of the fund's portfolio is dedicated to medium- and small-sized companies, thing the S&P 500 doesn't include.
The system is presently facing higher ostentation and higher involvement rates. These could deed small-caps particularly hard, fixed that determination are truthful galore unprofitable companies successful that group.
The Russell 2000, however, trades astatine a guardant price-to-earnings (P/E) of conscionable 16, making it an charismatic value.
Small-caps beryllium successful a semipermanent plus allocation alongside large-caps.

People looking astatine charts connected a tablet.

While short-term show tin alteration owed to immoderate fig of factors, semipermanent show is heavy driven by 1 factor: net growth. If you privation to recognize wherefore large-caps person outperformed small-caps by specified a wide borderline implicit the past respective years, look nary further than the net trajectory for the 2 groups.

In 2023 and 2024, the S&P 600 small-cap scale delivered consistently antagonistic year-over-year net growth. For comparison, the Nasdaq-100 had mostly been delivering annualized net maturation successful the 15% to 30% range. But now, that inclination is starting to adjacent out. In 2026, FactSet is forecasting year-over-year net maturation of 29% for the S&P 600. That's adjacent amended than the forecast for the vaunted Nasdaq-100.

Read Entire Article