VOO vs. VTI – Vanguard’s S&P 500 and Total Stock Market ETFs
Two of the most popular stock market index ETFs are the Vanguard S&P 500 ETF (VOO) and the Vanguard Total Stock Market ETF (VTI). Here we’ll dive into their differences, similarities, and performance.
// TIMESTAMPS:
00:00 - Intro
00:46 - Methodology & Composition
02:45 - Performance
03:45 - Recap
04:48 - Conclusion
06:38 - Disclosure
07:04 - Disclaimer
07:35 - Outro
// SUMMARY:
VOO and VTI are the two most popular U.S. stock market ETFs out there. Both are from Vanguard.
VOO tracks the S&P 500 Index. VTI tracks the CRSP US Total Market Index.
As such, VOO is entirely large-cap stocks, while VTI also includes small- and mid-cap stocks.
Specifically, VOO comprises roughly 82% of VTI by weight.
Consequently, VTI has been – and should be expected to be – slightly more volatile than VOO.
Since it contains small- and mid-caps, which have outperformed large caps historically due to the Size factor premium, we would expect VTI to outperform VOO over the long term, and indeed it has historically.
VOO has roughly 500 holdings and VTI has roughly 3,500 holdings, so VTI can be considered more diversified.
Both VOO and VTI have the same expense ratio of 0.03%.
VTI is much more popular than VOO.
VOO and VTI are highly correlated, as the former makes up about 82% of the latter by weight. Because of this, their historical performance has been very close, but we would expect VTI to slightly outperform VOO over the long term due to its inclusion of small- and mid-cap stocks, and indeed it has historically. Conveniently, VTI can also be considered more diversified, as it holds about 3,000 more stocks than VOO. This contrasting number of holdings and subsequent cap size exposure is the primary difference between VOO and VTI.
The investor who for some reason is only seeking lower volatility large-cap stocks will want to go with VOO, tracking the S&P 500 Index. Those desiring greater diversification and greater expected returns, at the cost of slightly greater volatility, will want to go with VTI to capture the entire U.S. stock market. Alternatively, you might use VOO in combination with a small cap value fund; that’s what I do in my own portfolio.
In any case, both VOO and VTI are solid choices to get broad exposure to the U.S. stock market. Some employer-sponsored retirement plans may only offer one of these funds and not the other. Keep in mind you may see their mutual fund equivalents, which are VFIAX for VOO and VTSAX for VTI.
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#investing #voo #vti #vanguard #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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