VT vs. VTI – Vanguard Global Stock Market vs. U.S. Stock Market
VT and VTI are two very popular index funds from Vanguard. Here we’ll dive into their differences, similarities, performance, and why you might want one over the other.
// TIMESTAMPS:
00:00 - Intro
00:19 - Methodology, Composition, and Reasoning
03:46 - Historical Performance
04:08 - Global Diversification
08:57 - AUM and Fees
09:41 - Conclusion
10:17 - Outro
// SUMMARY:
VT is the Vanguard Total World Stock ETF. As the name suggests, it’s a market cap weighted fund that holds the global stock market. Specifically, VT seeks to track the FTSE Global All Cap Index. Its mutual fund equivalent is VTWAX. It holds everything in the world – all sectors, all styles, all cap sizes, and all geographies (except frontier markets). It’s the broadest index fund out there. If you want to be 100% stocks and you don’t want to bother betting on specific countries or cap sizes or styles or whatever, just buy this fund and call it a day, and you can brag to your friends that you own over 8,500 stocks in your portfolio. Come back 30 years later and enjoy your gains. Doesn’t get much simpler.
VTI, on the other hand, is the Vanguard Total Stock Market ETF. Its mutual fund equivalent is VTSAX. I’m not sure why Vanguard doesn’t include “US” in the name, because at a glance you might reasonably think the name of this fund implies that it is the total global stock market. It’s not. This is just the total U.S. stock market. Like VT, it’s market cap weighted. Specifically, the fund seeks to track the CRSP US Total Market Index. So we’re talking about all sectors, styles, and cap sizes, but only within the U.S. There are no international stocks in VTI. So while the fund still holds nearly 4,000 stocks, it is much more concentrated than VT, as VT holds the U.S. plus all the other countries in the world. As such, VT can be considered much more diversified than VTI.
While they’re both very popular, have low fees, and reliably track their respective indexes, Vanguard’s VT and VTI are two completely different funds. The former is the entire global stock market, while the latter is just the U.S. stock market. I’m a huge fan of diversification across geographies. In any case, don’t use VTI alone. So the question becomes: Do you want to be completely hands-off and use VT to get the market cap weights of the world or would you rather use VTI in conjunction with VXUS (or your international fund of choice) for some home country bias and rebalance regularly?
What do you think of VT and VTI? Let me know in the comments.
Read the blog post here: https://www.optimizedportfolio.com/vt...
#vt #vti #vanguard #investing #etfs
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Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: https://www.optimizedportfolio.com/te...
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