When passive investors discuss ETF’s, they often refer to “buying the market.” But how big a market are we talking about?

To harness the U.S. market, some investors will buy the S&P 500 through funds like the SPDR S&P 500 ETF (NYSE:SPY). Others, however, go broader — much broader — choosing to invest in the Dow Jones US Total Stock Market Index, Dow Jones US Broad Market Index, Wilshire 5000 Total Stock Market Index or the MSCI US Broad Market Index.

In all instances, the indices hold more than 3,000 U.S. stocks, or 99% of the U.S. equity markets. In the long term, the extra diversification should provide slightly better performance than the S&P 500. That being the case, let’s have a look at some of the ETF options for “buying the market.”

Dow Jones

The first option is the SPDR Dow Jones Total Market ETF (NYSE:TMW), which matches the returns and characteristics of the Dow Jones U.S. Total Stock Market Index itself and is float-adjusted and cap-weighted. To be included in the index, an issue must be headquartered in the U.S., with its primary listing also in the U.S.

The fund’s top three sectors in terms of total net assets are information technology, financials and consumer discretionary stocks. These three sectors represent 45% of the fund’s total net assets. The top holding as of Feb. 3 is Exxon Mobil (NYSE:XOM) at 2.86% of the portfolio, and Apple (NASDAQ:AAPL) is a close second at 2.78%. While the index itself has 3,740 stocks, the ETF has just 997, and you can expect a tracking error of approximately 0.35% from the index.

Since TMW’s inception in October 2000, it has averaged an annual total return of 1.29%, compared to 1.49% for the index. In the past 10 years, the fund has averaged an annual total return of 4.1% compared to 3.86% for the S&P 500.

An alternative to the SPDR is the Schwab US Broad Market ETF (NYSE:SCHB), which tracks the Dow Jones US Broad Stock Market Index — similar to the Total Market index, but it excludes micro-cap stocks. SCHB has a 0.06% expense ratio, its year-to-date return is 7.78%, and its 52-week return is 4.84%.

Wilshire

In 2009, Dow Jones Indexes and Wilshire Associates parted ways, and Wilshire established the Wilshire 5000 Total Stock Market Index, which is similar in size to the Dow Jones index. If you want to own the entire market less the S&P 500, Wilshire also has the Wilshire 4500 Completion Index, which you’ll notice is conveniently 500 less than the total market.

Guggenheim offers two broad ETFs around the Wilshire indices. The Wilshire 5000 Total Market ETF (NYSE:WFVK), with an expense ratio of 0.12%, is up 7.8% year-to-date, slightly under the S&P 500. Its 52-week return is 4.23%, compared to 4.75% for the S&P 500. The Wilshire 4500 Completion ETF (NYSE:WXSP), at an expense ratio of just 0.18%, has been around for less than two years. The fund is up 11.4% year-to-date and 3.7% in the past 52 weeks.

Vanguard

The final possibility to own the broader market is through the Vanguard Total Stock Market ETF (NYSE:VTI), which tracks the MSCI US Broad Market Index. Like all Vanguard funds, its expense ratio is dirt cheap, at 0.07% annually. Any less and they’d be giving it away.

Interestingly, the Vanguard fund has 3,312 holdings, making it identical to the index it traces. As a result, VTI’s tracking error is 0.08% — far lower than any of the other funds. More importantly, its 10-year tax-adjusted return is 4.15% annually — 101 basis points higher than the TMW’s 3.14%.

Bottom Line

I’m currently reading Andrew Hallam’s The Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned In School, a book about index investing that suggests a portfolio of just three ETFs: a bond fund, an international total stock market fund and a U.S. total stock market fund. I couldn’t agree more. Simple is always better when it comes to investing. Unless you like paying higher fees, the Vanguard ETF is the way to go.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.