History Shows 1 Powerful Fact That Makes Me Bullish on VTI
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Why VTI’s Track Record Makes Me Nod Despite Local Options
VTI’s 25-year average return of 9.44% through crashes offers a lesson for South African investors on patience and broad exposure.
The Vanguard Total Stock Market ETF (VTI) has quietly proven something many local investors overlook: resilience and steady gains over time beat trying to time market peaks and troughs. Averaging about 9.44% a year since 2001, including the 2008 crash, underscores how a diversified U.S. equity basket can smooth out shocks. For South Africans scoping diversification beyond the JSE-heavy sectors, VTI can act as a ballast. While the rand’s gyrations against the dollar add volatility, they also open a hedge opportunity. You’ll find no unicorns like Naspers here, but technology giants such as Apple or Microsoft — which VTI holds — provide growth not easily replicated locally. That said, don’t expect a free ride. A sharp local currency depreciation or changes in U.S. fiscal policy could hit returns hard. Still, that long-term, auto-investing discipline it rewards is what local investors lack most. this is just our opinion and not financial advice
Consider allocating a portion of your offshore investment allowance to VTI via a rand-hedged ETF or direct USD purchase. Keep local exposure mainly to dividend-heavy, defensive names like Standard Bank or MTN to balance growth with income.
- VTI
- USD/ZAR
- Standard Bank
- Rand volatility against USD
- US interest rate shocks impacting equities
7/10
The Vanguard Morningstar Total Stock Market ETF (VTI) has delivered 9.44% average annual returns over its 25-year history since May 2001, despite major market crashes including the 2008 financial crisis. A $300 monthly investment over 25 years would have grown to over $325,000, demonstrating the power of long-term, consistent index fund investing in a diversified portfolio of 3,519 U.S. stocks.
Our take is based on reporting first published by The Motley Fool.