Vanguard S&P 500 ETF (VOO) vs Vanguard Total Stock Market ETF (VTI)

Last Updated on November 5, 2021

Thinking of buying between VOO and VTI? But you don’t know which ones to take? This article will help you in this way by showing the differences between the two most popular U.S. stock market ETFs (VTI vs. VOO) and explaining them.

Keynotes on VTI vs. VOO

  • VOO seeks to track the S&P 500 Index. VTI tracks the CRSP US Total Market Index.
  • VOO consists of large-cap stocks. VTI consists of small, mid and large cap stocks.
  • Both have expense ratio of 0.03%.
  • VTI is more volatile
  • VTI has $286B assets under management, while VOO has $270.35B
  • VOO is newer ETF – it has inception in 2010, while VTI has inception 2001
  • VOO is more liquid with average daily volume of $1.77B, VTI has $742M
  • VOO has around 500 holdings and VTI almost 4000 holdings, there VTI is more diversified
  • Both VOO and VTI are diversified across United States

VTI vs. VOO Main Differences

VTI

VTI is considered best for investors looking for diversified, total-market equity exposure, including micro-caps which can generate massive profits in the future. The fund is passively managed and remains fully invested at all times. Over its life of more than 20 years the ETF has tracked various broad indexes from Dow Jones, MSCI, and as of June 2013, CRSP US Total Market Index.

Financially Fit Investor chart for TICKER VTI
VTI Top 10 Sectors
VTI Top 10 Holdings

VOO

VOO is considered the best ETF for investors who want to invest in large-cap stocks. The fund tracks S&P 500 Index, holding the 500 largest U.S. companies. Companies in the S&P 500 index account for approximately 80% of total U.S. stock market capitalization.

Financially Fit Investor chart for TICKER VOO
VOO Top 10 Sectors

VOO Top 10 Sectors show how well diversified this ETF is – the biggest holding of around 35% is in technology. After that comes consumer cyclical with around 15%. Followed by financials, healthcare and industrials.

VOO Top 10 Holdings

The main difference between VTI and VOO is that VTO includes large-cap stocks, while VTI includes also small and mid-cap stocks. Therefore, investors aiming for broader market diversification will find VTI a more favorable option.

VTI vs. VOO – Performance

It is important to emphasize that small and medium-sized companies are riskier. Given the risk, it is likely that such companies will bring slightly higher yields over the long term. This is what the table and graph below prove.

ETF1 MONTH3 MONTHSYTD1 YEAR3 YEARS5 YEARS10 YEARS
VTI6.09%5.84%23.87%43.47%21.73%19.48%16.33%
VOO6.41%5.90%25.50%40.34%21.75%19.60%16.26%
VTI vs. VOO Performance as of 3 November 2021
Source: ETF.com

Conclusion

VTI and VOO are Vanguards ETFs that are very similar. Historical performance has been very close, with a slightly better return from VTI. It is expected from VTI to slightly outperform VOO over the long term due to its inclusion of riskier small and medium cap stocks.

The investor who doesn’t want to risk much and is seeking lower volatility large-cap stocks will want to go with VOO, tracking the S&P 500 Index. Investors desiring greater diversification and higher expected returns will want to go with VTI to capture small and mid-cap stocks at the cost of slightly greater volatility.

To conclude, VTI and VOO give exposure to the whole United states market. The yield and volatility of these two ETFs are similar. Therefore, by investing in one of them, you should cover the largest market in the world in a diversified portfolio. The option is also to combine VOO with another ETF that will include companies of SMEs.

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