Index providers take different approaches to partitioning the U.S. equity market by size. These methodological differences seem small, but they lead to the risk that investors may unknowingly create overlapping size-segment exposures--even if they own funds tracking indexes from the same index family. This is because these index families' market-cap segments are not always mutually exclusive.
Investors can avoid unintentional double-dipping by owning a total market strategy like Schwab U.S. Broad Market ETF (SCHB). This strategy is an excellent option for diversified exposure to U.S. stocks of all sizes. This fund gains a persistent edge over its peers by efficiently tracking a broadly diversified and representative benchmark at a low cost. It earns a Morningstar Analyst Rating of Gold.
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Adam McCullough has a position in the following securities mentioned above: VTI. Find out about Morningstar’s editorial policies.