VTI vs VOO: Settling the Debate

ETF Aug 22, 2024 4 min read
VTI vs VOO: Settling the Debate

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The main difference between the VTI (Vanguard Total Stock Market ETF) and the VOO (Vanguard S&P 500 ETF) lies in the scope of stocks that each of the ETFs cover.

Although both ETFs are equity-focused financial instruments run by Vanguard, they fulfill different purposes depending on the investor’s objectives.

The VTI tracks the performance of the CRSP US Total Market Index.

This index is market capitalization-weighted, meaning that companies with larger market caps influence the price of the index more than smaller caps.

Representing 100% of the US investable market, the index is comprised of 3500+ constituents spanning mega-cap, mid-cap, small-cap and micro-cap names.

On the other hand, the VOO mirrors the performance of the US S&P 500 – a market capitalization-weighted index that tracks the 500 largest names in the US stock market by market cap.

The S&P 500 is the most widely-recognized benchmark of US equity performance and is exclusively comprised of large-cap stocks.

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VTI

The VTI ETF was launched in May 2001 and uses the CRSP US Total Market Index as its benchmark.

Covering the breadth of the US stock market, the ETF tracks the performance of 3,500+ stocks and pays out quarterly dividends.

Given this broad exposure, the VTI is ideal for investors that have a bullish long-term view on US corporates and macroeconomic conditions.

The ETF also provides a modest dividend yield of 1.4% for income-seeking investors (as of Aug 8, 2024), but is primarily tailored for investors seeking a mix of growth and value investments.

As of June 30, 2024, the ETF had a cumulative market value of $1.6 trillion. Since its inception, VTI has delivered 8.74% annualized returns with a 10-year return of 12.53% (as of July 31, 2024).

VOO

The Vanguard S&P 500 ETF uses the S&P 500 as its benchmark.

As the most widely used barometer of the American stock market, the ETF tracks the performance of the 500 largest stocks powering the US economy.

Like the VTI, the VOO also issues a modest dividend yield of 1.36% paid on a quarterly basis, as of August 8, 2024.

While there are better ETFs to own for income-seeking investors, the VOO is a great addition to the portfolio for long-term investors seeking US equity market exposure.

If you are a fundamental investor seeking a blend of value and growth stocks with a bullish view on American markets and, the VOO is an ideal choice.

As of June 30, 2024, the ETF had a cumulative market value of $1.2 trillion and as of July 31, 2024, the ETF delivered 14.51% annualized returns since inception with a 10-year return of 13.11%.

VTI vs VOO Performance

VTI Annualized Performance (as of July 31, 2024):

  • 3-Year: 7.96%
  • 5-Year: 14.15%
  • 10-Year: 12.53%
  • Since inception: 8.74%

VOO Annualized Performance (as of July 31, 2024):

  • 3-Year: 9.55%
  • 5-Year: 14.95%
  • 10-Year: 13.11%
  • Since inception: 14.51%

 

VTI vs VOO Fees

Both VTI and VOO offer an identical Management Expense Ratio (MER) of 0.03%.

Compared to most other ETFs, this is considered an exceptionally low fee and reduces the tracking error of the ETF’s returns with its underlying benchmark.

VTI vs VOO Holdings

VTI:

Below are the top holdings within VTI as of June 30, 2024:

  • Microsoft Corp. (6.34%)
  • Apple Inc. (5.86%)
  • NVIDIA Corp. (5.51%)
  • Amazon.com Inc. (3.45%)
  • Alphabet Inc. (3.72%)
  • Meta Platforms Inc. (2.11%)
  • Berkshire Hathaway Inc. (1.5%)
  • Eli Lilly & Co. (1.48%)
  • Broadcom Inc. (1.42%)
  • Berkshire Hathaway Inc. (1.37%)
  • JPMorgan Chase & Co. (1.11%)

The sector diversification for the VTI ETF is as follows:

  • Technology (35.2%)
  • Consumer Discretionary (13.8%)
  • Industrials (12.1%)
  • Health Care (11.9%)
  • Financials (10.5%)
  • Consumer Staples (4.3%)
  • Energy (3.9%)
  • Real Estate (2.6%)
  • Utilities (2.6%)
  • Telecommunications (1.9%)
  • Basic Materials (1.7%)

 

VOO:

Below are the top holdings within VOO as of June 30, 2024:

  • Microsoft Corp. (7.23%)
  • NVIDIA Corp. (6.61%)
  • Apple Inc. (6.6%)
  • Amazon.com Inc. (3.85%)
  • Alphabet Inc. (4.28%)
  • Meta Platforms Inc. (2.4%)
  • Berkshire Hathaway Inc. (1.6%)
  • Eli Lilly & Co. (1.57%)
  • Broadcom Inc. (1.52%)
  • JPMorgan Chase & Co. (1.26%)

The sector diversification for the VOO ETF is as follows:

  • Technology (29.6%)
  • Financials (13.1%)
  • Health Care (12.4%)
  • Consumer Discretionary (10.3%)
  • Communication Services (8.9%)
  • Industrials (8.8%)
  • Consumer Staples (6.0%)
  • Energy (4.0%)
  • Materials (2.4%)
  • Real Estate (2.3%)
  • Utilities (2.2%)

As of June 30, 2024

Frequently Asked Questions

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Is it better to buy VTI or VOO?

Both the VTI and VOO ETFs offer exposure to the US equity markets with a low Management Expense Ratio of 0.03%. The VTI provides investors with broader exposure to stocks across the size spectrum in the US equity market. The VOO is focused exclusively on the 500 largest stocks by market cap. Depending on whether you are aiming for breadth or whether you want to gain exposure to the biggest movers and shakers in the market, the VTI or VOO may be suitable for you, respectively.

Is VTI like the S&P 500?

No, the VOO tracks the S&P 500 as its benchmark index. The VTI tracks the CRSP US Total Market Index which has over 3500+ constituents.

Why buy VOO instead of SPY?

Like the VOO, the SPY is an equity ETF tracking the S&P 500 as its benchmark. The SPY is recognized as the first and oldest ETF listed in the US. However, investors may prefer to buy VOO instead because of its lower MER of 0.03% vs. the SPR’s MER of 0.0945%.

Contributors

Harshil Dhanky
AUTHOR

Harshil Dhanky

Harshil Dhanky is a financial services professional based out of Toronto, Ontario with extensive experience in the Canadian banking industry across Toronto, Calgary, and Vancouver in the capital markets, asset management, and lending sectors.

In the past, Harshil has worked with a range of consumer lending websites, personal finance advisors, investment managers, insurance companies, and other financial institutions to write and edit whitepapers, articles, blog posts, and other collateral read by consumer audiences to help them make better financial decisions.

His work spans a wide range of Canadian personal finance topics including savings and retirement programs, debt management tips, mortgages and personal loans, and other key financial issues for Canadian consumers at each stage of their life.

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