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). Let’s compare them.
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 the 500 largest U.S. companies. It is considered a sufficient proxy and barometer for “the market” in the U.S.
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. VTI is also more diversified than VOO.
VOO vs. VTI — Historical Performance
Note that small- and mid-cap stocks have outperformed large-caps historically because they are considered riskier; this is known as the Size risk factor premium. Thus, we would expect VTI to slightly outperform VOO over the long term, and indeed it has historically, using their underlying indexes going back to 1972:
As we’d also expect due to its inclusion of smaller stocks, VTI has been slightly more volatile than VOO, meaning its variability of returns — measured by standard deviation — has been greater.
VOO vs. VTI — AUM and Fees
Though both funds are highly liquid and extremely 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 stocks via the S&P 500 index. Those desiring slightly more risk, more diversification, and greater expected returns 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.
Both VOO and VTI are solid choices to get broad exposure to the U.S. stock market.
Disclosure: I am long VOO.
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.
