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). Let’s compare them.
In a hurry? Here are the highlights:
- 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 includes small- and mid-cap stocks.
- Consequently, VTI has been – and should be expected to be – slightly more volatile than VOO.
- Historical performance of VTI and VOO has been nearly identical.
- VOO has roughly 500 holdings and VTI has roughly 3,500 holdings.
- Both VOO and VTI have the same expense ratio of 0.03%.
- VTI is much more popular than VOO.
Contents
VOO vs. VTI – Methodology and Composition
If you’ve landed here, you probably already know that stocks are a significant driver of portfolio returns, and that index funds are a great, low-cost way to get immediate, broad diversification across asset classes. You also probably already know that Vanguard has some of the lowest fees around and has a solid track record of providing ETFs that accurately track their indexes.
The Vanguard S&P 500 ETF (VOO) is one of the most popular stock ETFs out there. It was established in 2010. The fund seeks to track the famous S&P 500 Index, holding over 500 U.S. large-cap stocks.
The Vanguard Total Stock Market ETF (VTI) provides similar broad exposure to the U.S. stock market, with the addition of small- and mid-caps. It was established in 2001. The fund seeks to track the CRSP US Total Market Index. This ETF holds over 3,500 U.S. stocks across all cap sizes. Specifically, VTI is comprised of roughly 82% large-cap, 12% mid-cap, and 6% small-cap stocks. In that sense, VOO comprises roughly 82% of VTI.
Since small- and mid-cap stocks tend to be more volatile than large-caps, VTI should be – and has been – slightly more volatile than VOO. Note that small- and mid-cap stocks have outperformed large-caps historically because they are considered riskier. VTI is also technically more diversified than VOO.
VOO vs. VTI – Historical Performance
These two funds have delivered nearly identical performance since the inception of VOO in 2010:
While the actual fund performance of VOO and VTI has been nearly identical since inception, the indexes that these ETFs track have performed slightly differently historically:
While return has differed slightly, risk-adjusted return has favored the S&P 500 as we’d expect since small- and mid-caps have provided more volatility.
VOO vs. VTI – AUM and Fees
Though both funds are highly liquid and very popular, Vanguard’s VTI is much more popular with over $910 billion in assets under management. VOO has roughly $550 billion in assets.
Expense ratio for these funds is the same at a low 0.03%.
Conclusion
Investors seeking lower volatility in stocks will want to go with VOO to solely hold large-caps via the S&P 500 index. Those desiring more risk, more diversification, and/or wanting to bet on small- and mid-caps will want to go with VTI to capture the entire U.S. stock market. Remember, roughly 82% of VTI is VOO; the other 18% is comprised of small- and mid-cap stocks.
Both are solid choices to get broad exposure to the U.S. stock market.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.
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