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VTI and VOO are two exchange-traded funds (ETF) owned, operated, and promoted by one of the world’s largest asset management firms — the Vanguard Group. These two vehicles offer exposure to the United States equity market at a low cost by tracking different stock indexes.
In this article, we dig deeper into the similarities, differences, and overall characteristics of these two ETFs to help our readers in choosing the one that might fit their portfolio the best.
|Vanguard Total Stock Market ETF||Vanguard S&P 500 ETF|
|Fund Type||Exchange Traded Fund||Exchange Traded Fund|
|Minimum Investment||The price of one share||The price of one share|
|Pricing||Real-time pricing||Real-time pricing|
|Trading||Trades during market hours||Trades during market hours|
|Number of Stocks||4100||505|
|Highlight||Tax efficient fund||Tax efficient fund|
VTI vs. VOO: Overview
In this section, we summarize what these funds are as well as their scope and reach so our readers get more familiar with them before we start providing further technical details.
What Is VTI?
Launched in May 2011, the Vanguard Total Stock Market ETF (NYSEARCA: VTI) is comprised of over 4,000 stocks of the largest and most successful companies within the United States, managing over $1 trillion in assets and charging a rather small expense ratio of 0.03% per year.
This ETF tracks the performance of the CRSP US Total Market Index and focuses primarily on large, mid, and small-cap stocks based within the country.
What Is VOO?
The Vanguard S&P 500 ETF (NYSEARCA: VOO) was launched in September 2010 and currently manages over $800 billion in assets for investors. The fund’s portfolio holds around 500 different stocks and charges a low expense ratio of 0.03%.
VOO tracks the performance of the popular Standard & Poor’s index which is comprised of the 500 largest corporations in America by market capitalization.
VTI vs. VOO: Performance
In this section, we provide information on how the two ETFs have performed during different periods.
This is a summary of the annualized performance of VTI for different time frames at the time this is being written (June 20, 2022):
- Since inception (05/2001): 8.06%
- 10-year annualized gain: 13.95%
- 5-year annualized gain: 12.68%
- 3-year annualized gain: 15.45%
- 1-year annualized gain: -4.00%
For reference, $10,000 invested in VTI 10 years ago would have grown to $37,806 by now.
This is a summary of the annualized performance of VOO for different time frames at the time this is being written (June 20, 2022):
- Since inception (09/2010): 14.23%
- 10-year annualized gain: 14.36%
- 5-year annualized gain: 13.36%
- 3-year annualized gain: 16.42%
- 1-year annualized gain: -.0.28%
For reference, $10,000 invested with VOO 10 years ago would have grown to $38,903 by now.
VTI vs. VOO: Similarities
In this section, we summarize the characteristics that make these two ETFs similar, including their expense ratios and yields.
Both VTI and VOO are considered relatively cheap investment vehicles as they both charge a small 0.03% annual percentage fee to investors.
Exchange-traded funds (ETFs) can be categorized based on a large number of variables including their geographical scope, the industry they invest in, and the strategy they follow (dividend, growth, value, etc.). In the case of VTI and VOO, they are both considered large-blend funds. This means that they invest in both growth and value stocks.
Moreover, the two funds invest primarily in corporations headquartered in the United States of all sizes — large, mid, and small-caps.
Both VTI and VOO pay dividends every quarter. These distributions are paid in March, June, September, and December.
Similar Returns & Overall Performance
Even though there are some pronounced differences in the short-term performance of these two ETFs, their overall performance tends to be quite similar in the long-term with a five-year holding period or longer.
The different weight that certain sectors have in the portfolio of each ETF is probably the main reason why their performance varies in the short-term as natural stock market cycles tend to influence gains more in the near term than they do in the long term.
One good example of this is Consumer Discretionary, a sector that has an 10.90% weight in the case of VOO and a 14.00% weight in the case of VTI.
Even though their sectorial composition varies, the top 10 holdings of the two ETFs are the same. By the end of June 2022, the last observed period, these were the top 10 holdings for the two funds:
|Top Holdings (VTI)||Top Holdings (VOO)|
|Apple Inc. (AAPL)||Apple Inc. (AAPL)|
|Microsoft Corp. (MSFT)||Microsoft Corp. (MSFT)|
|Amazon.com Inc. (AMZN)||Amazon.com Inc. (AMZN)|
|Alphabet Inc. Class A (GOOGL)||Alphabet Inc. Class A (GOOGL)|
|Tesla Inc. (TSLA)||Tesla Inc. (TSLA)|
|Alphabet Inc. Class C (GOOG)||Alphabet Inc. Class C (GOOG)|
|Berkshire Hathaway Inc. Class B (BRK.B)||Berkshire Hathaway Inc. Class B (BRK.B)|
|Johnson & Johnson (JNJ)||Johnson & Johnson (JNJ)|
|UnitedHealth Group Inc. (UNH)||UnitedHealth Group Inc.|
|Meta Platforms Inc. (META)||NVIDIA Corp. (NVDA)|
VTI vs. VOO: Differences
Now, let’s dive into the differences between these two ETFs, including their portfolio turnover rate, dividend yield, and number of holdings.
Portfolio Turnover Rate
The turnover rate of a fund measures how fast holdings are bought and sold, and it is a metric that helps investors in figuring if a vehicle is passively or actively managed.
The turnover rate of VTI (4.0%) is twice as high as that of VOO (2.3%), and this might be the case because of the largest number of holdings that the former has to incorporate into the portfolio and the faster pace at which its benchmark changes its composition.
The price of VOO is higher ($337.95) than that of VTI ($183.71), and that could be an important factor to consider when building a small portfolio, as it would make it more difficult for investors to incorporate other securities to increase diversification.
That said, most US-based brokerage firms offer fractional shares for any of these two funds, which would eliminate such a barrier, meaning that investors would be able to incorporate the exact percentage of VOO or VTI they want regardless of their account balance.
Number of Holdings
At the time this is written, VTI’s portfolio is comprised of 4,100 different stocks while VOO invests in only 505 companies. The reason for this difference is that each ETF tracks a different benchmark. In the case of VOO, this benchmark is the popular S&P 500 Index while VTI tracks the CRSP US Total Market Index.
At the moment this is written, the 30-day SEC yield of VTI stands at 1.39% while VOO is offering a 1.45% yield.
Equity Sector Diversification
Even though the two funds are considered large blends, their sectorial composition is different due to the different number of stocks that each of them invests in. In the case of VTI, the most prominent sector is Technology which accounts for 25.90% of the fund’s holdings followed by Consumer Discretionary (14.0%), Industrials (12.80%), and Health Care (13.40%).
Meanwhile, in the case of VOO, the Information Technology sector accounts for 27.10% of the fund’s holdings followed by Health Care (14.40%), Consumer Discretionary (10.90%), and Financials (11.20%).
|Equity Sector Diversification (VTI)||Equity Sector Diversification (VOO)|
|Basic Materials: 2.30%||Communication Services: 8.80%|
|Consumer Discretionary: 14.00%||Consumer Discretionary: 10.90%|
|Consumer Staples: 5.50%||Consumer Staples: 6.50%|
|Energy: 5.00%||Energy: 4.80%|
|Financials: 11.50%||Financials: 11.20%|
|Health Care: 13.40%||Health Care: 14.40%|
|Industrials: 12.80%||Industrials: 7.70%|
|Real Estate: 3.70%||Technology: 27.10%|
|Technology: 25.90%||Telecom: 2.80%|
|Telecom: 2.60%||Real Estate: 2.80%|
|Utilities: 3.30%||Utilities: 3.00%|
Total Net Assets
At the moment this is written, the Vanguard Total Stock Market ETF (VTI) administers $1.2 trillion for investors with the top 10 holdings accounting for 24.7% of the fund’s total assets.
Meanwhile, the Vanguard S&P 500 ETF currently oversees $766.3 billion for investors, and its top 10 holdings account for 29.5% of the fund’s total assets.
VTI vs. VOO: Other Considerations
Aside from the technical factors mentioned above, there are some other metrics that investors may want to consider before they pick which of these two ETFs fits their risk tolerance, financial goals, and individual preferences the best.
The standard deviation is a metric used to analyze the volatility of a financial instrument by determining how its performance has fluctuated within different periods. In simple words, an ETF with a standard deviation of 3.5% and average returns of 6% during a 10-year period could deliver intra-period returns of approximately 2.5% and 9.5% per year.
In the case of VTI, the standard volatility of the fund stands at 18.88 according to data from Morningstar. Meanwhile, the standard deviation of VOO is lower at 18.13.
Risk factors measure how an ETF’s performance has deviated from that of the benchmark it tracks during a certain period. In this article, we will focus on two indicators: alpha and beta.
Alpha measures the positive or negative difference between a fund’s performance and that of its benchmark. VTI’s alpha stands at -1.34 at the moment according to data from Morningstar while the same metric for VOO stands at -0.04.
This indicates that VOO’s managers have made a better job at tracking their respective benchmarks compared to VTI, as the latter has produced risk-adjusted returns that fell short of those delivered by the index they track.
Meanwhile, the beta for VTI stands at 1.04, while that of VOO stands at 1.00. Beta is a measure of risk expressed as to how correlated a fund’s performance is to that of the stock market as a whole.
Based on these readings, both ETFs have delivered similar risk-adjusted returns compared to the market as a whole, but VTI has underperformed compared to its expected risk-adjusted-performance.
This ratio measures if an ETF is successfully delivering additional gains for every unit of additional risk it takes. A high Sharpe ratio — above 1 — is typically considered positive, as it means that portfolio managers are finding optimal ways to deliver higher returns without incurring more risks.
For VTI, the Sharpe ratio stands at 0.83. Meanwhile, for VOO, that same ratio stands at 0.90. Neither of the two ETFs are delivering higher returns for the extra risk they are assuming, while in the case of VTI, the situation is perhaps worse, as it is actually underperforming on a risk-adjusted basis.
They have developed a rating system that helps investors in determining the quality of a certain financial instrument based on their team’s assessment of a handful of variables.
In the case of VTI, Morningstar has rated the ETF as Above Average in terms of risk when compared to other similar funds. Meanwhile, when it comes to its returns, VTI has been rated as Average compared to its peers.
In contrast, VOO has been rated Average in terms of risk but has received an Above Average rating when it comes to its returns.
VTI vs. VOO: Verdict
To pick which of these two ETFs is the best, we will focus on the three variables which are perhaps the most important for the lay investor: performance, risk, and volatility.
In terms of performance, VOO has performed significantly better than VTI in the near- and mid-term (1-year and 3-year returns) with annualized gains standing at -0.28% and 16.42% for VOO respectively compared to the -4.00% and 15.45% produced by VTI during those two periods.
Moreover, in the long-term (5-year and 10-year returns), the performance of VOO has also been slightly better at 13.36% and 14.36% respectively compared to 12.68% and 13.95% produced by VTI in those two periods.
Additionally, VOO has done a better job at tracking its benchmark than VTI as reflected by the alpha and beta indicators and its Sharpe ratios. Even though both ETFs are considered risky vehicles since they invest in variable income instruments (equities), VOO has the lowest beta of the two and the closest to 1.
As for the fund’s volatility, the standard deviation of VOO is lower than that of VTI, meaning that its historical gains fluctuated less than those of its peers.
That said, one additional factor to consider is related to the fund’s concentration. In this particular aspect, 29.5% of VOO’s assets are concentrated among its top 10 holdings which include primarily top tech firms.
That percentage is significantly higher than the one exhibited by VTI — which stands at 24.7% — and exposes the ETF to more sector-specific volatility considering that most of its top 10 constituents are companies within the tech sector (Apple, Microsoft, Alphabet, Amazon, Meta Platforms, etc.).
VTI vs. VOO: How to Invest
Exchange-traded funds (ETF) can be bought and sold as if they were a regular stock, which has reduced the cost of investing in these vehicles while making the process easier at the same time.
Most brokerage firms nowadays offer access to ETFs, and Vanguard’s funds are among the most popular. Therefore, investors can trade these securities with virtually any US-based broker including Moomoo, TradeStation, and Firstrade.
Most of these providers offer zero-commission trades, and some of them even offer fractional shares for VOO and VTI for investors who have a small account balance but still want to build a diversified portfolio.
VTI vs. VOO: Alternatives
The Vanguard Group offers access to other investment vehicles — mutual funds — that offer exposure to the same benchmark, portfolio holdings, and performance than VTI and VOO, although these vehicles have different characteristics.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
- Price: $112.51
- Benchmark: CRSP US Total Market Index
- Number of holdings: 4,070
- 1-year performance: 11.93%
- 5-year performance: 14.64%
- 10-year performance: 14.22%
- Assets under management (AUM): $1.3 trillion
- Top 10 holdings as a percentage of total assets: 24.7%
- Portfolio turnover rate: 2.8%
- Minimum investment: $3,000
- Expense ratio: 0.04%
Vanguard 500 Index Fund Admiral Shares (VFIAX)
- Price: $424.77
- Benchmark: S&P 500 Index
- Number of holdings: 507
- 1-year performance: 16.35%
- 5-year performance: 15.14%
- 10-year performance: 14.55%
- Assets under management (AUM): $808.8 billion
- Top 10 holdings as a percentage of total assets: 29.5%
- Portfolio turnover rate: 1.1%
- Minimum investment: $3,000
- Expense ratio: 0.04%
Frequently Asked Questions (FAQs) VTI vs. VOO
The following are answers to some of the most frequently asked questions we get on the topic of VTI vs. VOO.
When Do VTI and VOO Pay Dividends?
Both ETFs pay dividends every quarter, specifically in March, June, September, and December. Dividend yields vary over time, so investors should check Vanguard’s website to check the current yield.
What Does VOO Track?
VOO tracks the popular S&P 500 index comprised of the largest publicly-traded corporations in the United States by market capitalization. This index is compiled and managed by S&P Global Ratings, a division of S&P Global Inc.
What Does VTI Track?
VTI tracks the CRSP US Total Market Index. This index is comprised of over 4,000 different stocks of different industries, sizes, and fundamental characteristics. The goal of this index is to track the performance of the US stock market as a whole.
The index is built and managed by the Center for Research in Security Prices (CRSP), an affiliate of the Chicago Booth School of Business.
In this article, we have outlined the similarities, differences, and other characteristics of these two exchange-traded funds (ETF). Even though the two are more than suitable to provide investors with exposure to the US equity market, VOO seems to have more to offer in terms of performance, risk, and volatility.
In any case, we encourage investors to seek the council of an advisor or to sign-up with a robo-advisor to build a portfolio that is customized to their unique financial goals, risk tolerance, and other relevant personal factors.
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Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and has also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.