VOO vs. VTI: Unraveling the Distinctions Between Two Top Vanguard ETFs (2024)

FAQs

VOO vs. VTI: Unraveling the Distinctions Between Two Top Vanguard ETFs? ›

VTI is a total U.S. market fund and holds more than 3,500 stocks. VTI is better diversified and benefits from small and mid-cap stocks that grow into large caps. VOO is less diversified, tracking the performance of the S&P 500 Index. VOO excludes small and mid-cap stocks.

Vanguard's Total Stock Market ETF (VTI) is similar to VOO in many ways, but the main difference is that it holds a much broader range of stocks. It follows the CRSP U.S. Total Market Index, which includes all the stocks in the S&P 500 plus over 3,000 additional stocks. This represents the entire U.S. stock market.

As a result, both ETFs have a very low expense ratio of 0.03% and a minimum investment of $1.00. Since VTI and VOO are both ETFs, they have the same trading and liquidity, tax efficiency, and tax-loss harvesting rules.

VTI: Offers broader diversification by including mid-cap and small-cap stocks in addition to large-cap stocks. This can provide exposure to a wider range of sectors and market segments. VOO: Concentrates on large-cap stocks, particularly those in the S&P 500.

Vanguard S&P 500 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.

The primary difference between SPY, VOO, IVV, and SPLG is their cost. SPLG has the lowest cost at 0.02%, followed by VOO and IVV at 0.03%, and SPY at 0.09%. If you are a cost-conscious investor, the VOO, IVV, and SPLG might make a more attractive option compared to SPY with their lower expense ratios.

The table below shows the total annual returns between VTI and SPY. The table above shows that SPY outperformed VTI in 8 out of 10 years from 2014 to 2023. On average, SPY outperformed VTI by an average of 1.01%. VTI only outperformed in 2 years, from 2014 to 2023, by an average of 1.75%.

VTI is an extremely diversified fund. Its large amount of holdings reflect the entire universe of investable U.S. securities. The fund has exposure to small-cap stocks which can be more volatile than mid- or large-cap holdings. The fund has a beta of 1.0 when compared to the larger market.

Is VOO or VTI better for Roth IRA? ›

Realistically they will perform about the same and it makes no difference. If you hold VTI or VOO in a brokerage account, I would use the other in Roth IRA to avoid wash sales. Even if you can buy fractional shares you still end up with loose change in the account from rounding. It doesn't matter but just bugs me.

VTI - Dividend Comparison. VOO's dividend yield for the trailing twelve months is around 1.30%, less than VTI's 1.34% yield.

VTI is a total U.S. market fund and holds more than 3,500 stocks. VTI is better diversified and benefits from small and mid-cap stocks that grow into large caps. VOO is less diversified, tracking the performance of the S&P 500 Index. VOO excludes small and mid-cap stocks.

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The similarities between VOO and VTI are remarkable, with an 85% overlap in terms of portfolio weight.

Vanguard Total Stock Market ETF VTI offers cost-efficient, well-diversified exposure to the entire US stock market—a recipe for success over the long run. The fund tracks the CRSP US Total Market Index, which represents approximately 100% of the investable US opportunity set.