VTI Is Cheaper Than It Used to Be. So What's the Catch?
This financial analysis examines the Vanguard Total Stock Market ETF (VTI), which is trading at a trailing P/E of 28.1—about 32% below its 5-year average of 41.4. Despite the discount, the fund's earnings yield of 3.6% is lower than the 10-year US Treasury yield of 4.6%, creating a negative risk premium. The article notes that consensus forward P/E of 19.6 implies expected earnings growth of 18%, driven by top holdings like Nvidia (6.7% of fund) and Apple (6.3%), which saw 53% EPS growth over the past year. The central trade-off is whether the lower valuation and strong earnings growth justify forgoing the higher risk-free return from government bonds. The piece concludes that investors must watch whether corporate earnings close the gap with the risk-free rate.
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