> > VTSAX vs. VTI 2024: Which One Is Best?

VTSAX vs. VTI 2024: Which One Is Best?

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The Vanguard Total Stock Market ETF (VTI) and The Vanguard Total Stock Market Index Fund (VTSAX) are two investment vehicles managed by one of the United States’ largest asset managers, The Vanguard Group. Both offer exposure to a wide range of stocks — primarily from companies based in the US and they are considered some of the best funds for building a diversified portfolio that follows a moderate to aggressive strategy.

In this article, we explain the similarities and differences between these two index funds to help investors in choosing the one that fits their strategy and financial situation the best.

Vanguard Total Stock Market ETFVanguard Total Stock Market Index Fund Admiral Shares
TickerVTIVTSAX
Fund TypeExchange Traded FundMutual Fund
Minimum InvestmentThe price of one share$3,000
Expense Ratio0.03%0.04%
PricingReal-time pricingPrice calculated end-of-day
TradingTrades during market hoursTrades at market close
Number of Stocks41394139
Dividend Yield1.33%1.25%
HighlightTax efficient fundAutomated investing

What Is VTI?

The Vanguard Total Stock Market ETF (NYSEARCA: VTI) is an exchange-traded fund (ETF) that was launched in May 2011 and currently manages $1.3 trillion in assets for investors. The fund’s portfolio holds over 4,000 different stocks and charges a low expense ratio of 0.03%.

VTI tracks the performance of the CRSP US Total Market Index and it invests in large, mid, and small-cap stocks by following a passive approach.

VTI Performance

This is a summary of the annual performance of VTI (for different time frames) on December 31, 2021:

  • Since inception: 9.04%
  • 10-year annualized gain: 16.29%
  • 5-year annualized gain: 17.97%
  • 3-year annualized gain: 25.76%
  • 1-year annualized gain: 25.64%

For reference, $10,000 invested with VTI at the beginning of 2011 (10 years ago) would have grown to $45,239 by now.

VTI vs. S&P 500
Source: Google Finance — VTI vs. S&P 500, data Jan 26, 2022

What Is VTSAX?

The Vanguard Total Stock Market Index Fund Admiral Shares (MUTF: VTSAX) is one of the US’s oldest mutual funds as it was launched back in 1975. This fund currently manages some $1.3 trillion in assets for investors, charging a low expense ratio of 0.04% but requiring a minimum investment of $3,000.

VTSAX tracks the performance of the Spliced Total Stock Market Index and it invests in large, mid, and small-cap stocks issued by companies based in the United States primarily as well.

VTSAX Performance

This is a summary of the annual performance of VTSAX (for different time frames) on December 31, 2021:

  • Since inception: 8.61%
  • 10-year annualized gain: 16.29%
  • 5-year annualized gain: 17.98%
  • 3-year annualized gain: 25.77%
  • 1-year annualized gain: 25.71%

For reference, $10,000 invested with VTSAX at the beginning of 2011 (10 years ago) would have grown to $45,224 by now.

VTSAX  vs. S&P 500
Source: Google Finance — VTSAX vs. S&P 500, data Jan 26, 2022

Why Do Investors Choose to Invest in VTSAX or VTI?

Funds that track certain indexes — especially broad-market indexes — have gained popularity in recent decades as they allow lay investors to relax and let professionals do the heavy lifting by following a passive approach.

Passively-managed vehicles like VTSAX and VTI have attracted trillions from investors due to their easy-going investment approach. They typically track the performance of a large basket of high-quality stocks issued by US-based companies.

Moreover, their expense ratio is remarkably low and this allows investors to keep most of the gains that they generate and their historical performance has been quite robust as indicated above.

Both VTI and VTSAX are considered top choices when building a diversified portfolio that incorporates a stock allocation — whether that is an aggressive, intermediate, or conservative one.


What Are the Similarities Between VTSAX and VTI?

The following is a summary of the characteristics that these two funds share that make them rather similar. There are also some differences that we will highlight later in the article.

Expense Ratios

An expense ratio is a percentage that the fund manager (in this case Vanguard) charges to the investor for operating the fund. In the case of VTI, the expense ratio currently stands at 0.03% while the ratio is slightly higher for VTSAX at 0.04%.

Similar Returns & Overall Performance

As evidenced by the performance tables shown above, the gains produced by these two funds during the same time frames have been nearly the same. It is highly unlikely that their performance will vary significantly in the future amid their similar structure and expense ratios. 

Meanwhile, the tracking error of these funds is typically low, meaning that their results don’t tend to deviate much from that of the benchmark (the index that they track). 

Similar Yields

The 30-day SEC yield offered by VTI as of October 2021 is 1.15% while that of VTSAX stands at 1.14%. This slight gap might be caused by different weights assigned to some dividend-producing equities within the portfolios of the two funds.

Top Holdings

The top 10 largest holdings of these two funds are nearly identical, with Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG) leading the table as of September 2021. For both VTI and VTSAX, their top 10 holdings account for 23.9% of their total portfolio. Meanwhile, foreign holdings (non-US companies) account for only 0.1% of the fund’s total assets.

Here are the top holdings for each of the funds:

Top Holdings (VTI)Top Holdings (VTSAX)
Apple Inc.Apple Inc.
Microsoft Corp.Microsoft Corp.
Alphabet Inc.Alphabet Inc.
Amazon.com Inc.Amazon.com Inc.
Tesla Inc.Tesla Inc.
Meta Platforms Inc.Meta Platforms Inc.
NVIDIA Corp.NVIDIA Corp.
Berkshire Hathaway Inc.Berkshire Hathaway Inc.
UnitedHealth Group Inc.UnitedHealth Group Inc.
JPMorgan Chase & Co.JPMorgan Chase & Co.

Here is the portfolio composition by sector for each of the funds:

Equity Sector Diversification (VTI)Equity Sector Diversification (VTSAX)
Basic Materials: 2.00%Basic Materials: 2.00%
Consumer Discretionary: 16.00%Consumer Discretionary: 16.00%
Consumer Staples: 4.70%Consumer Staples: 4.70%
Energy: 2.80%Energy: 2.80%
Financials: 10.90%Financials: 10.90%
Health Care: 12.80%Health Care: 12.80%
Industrials: 12.80%Industrials: 12.80%
Real Estate: 3.70%Real Estate: 3.70%
Technology: 29.00%Technology: 29.00%
Telecom: 2.60%Telecom: 2.60%
Utilities: 2.70%Utilities: 2.70%

What Is the Difference Between VTSAX and VTI?

After highlighting the similarities between these two funds, we will now explore the main differences between them.

Minimum Investments

VTSAX is a mutual fund. This type of fund typically requires a minimum investment and for VTSAX that figure stands at $3,000.

VTI is listed as an exchange-traded fund (ETF). These funds are structured differently than mutual funds as they trade on an exchange in the same way that a stock does. For this reason, the minimum investment in VTI is the price of the ETF at any given point in time while some brokers may even allow investors to purchase a portion of VTI via fractional shares.

Real-Time Pricing

The price of a mutual fund like VTSAX is calculated at the end of every trading session based on the closing price of its holdings. This figure is also known as the net asset value (NAV) of the fund. The fund will typically use the price from the preceding day when accepting new funds to determine the number of shares that are being purchased.

Meanwhile, the price of exchange-traded funds (ETF) like VTI is set by market forces as these instruments are traded in the open market. As a result, the price of the ETF and its NAV can be different at any given point. If the NAV is below the market price, the fund is said to be trading at a discount. On the other hand, if the market price is higher than the NAV, the fund is said to be trading at a premium.

Automatic Investments

Automatic investments can be set for VTSAX by opening an account with Vanguard. This feature will deduct money from a bank account periodically based on the instructions provided by the investor. The funds will be automatically invested into VTSAX.

Automatic investments are not available for VTI as they are only permitted for mutual fund investing, not exchange-traded funds (ETF).

Tax Efficiency

The inner workings of mutual funds and exchange-traded funds (ETF) make them different from a taxation standpoint. Mutual funds are constantly forced to liquidate a portion of their holdings to rebalance their portfolio in line with their net inflows. 

As a result, shareholders will be subject to the capital gains the fund generates without being able to offset them by their individual accumulated capital losses — at least not unless they liquidate their position in the fund. Therefore, a higher tax bill is typically passed on indirectly to shareholders of the mutual fund, which is not the case with ETFs.

The reason for this is that ETFs were created with certain mechanisms that prevent them from incurring capital gains taxes.

In summary, the impact on the investor in passively managed funds like VTSAX and VTI might be quite small but actively managed mutual funds might produce lower gains compared to an ETF that tracks the same index due to the tax implications of their structure.

Aside from that, investors will still have to pay capital gains taxes on any positive proceeds they earn from their exposure to either VTSAX or VTI.

Transparency

Exchange-traded funds (ETF) like VTI update their existing portfolio holdings by the end of every trading session while mutual funds like VTSAX are required to do so by the end of every quarter or monthly. 

As a result, ETFs tend to be more transparent about their portfolio compared to mutual funds. However, since these two funds are passively-managed vehicles, their holdings will remain almost the same as those of the underlying index, meaning that investors should not worry much about significant deviations in their portfolio composition.


How to Buy a VTSAX or VTI Fund? 

There are various ways to buy VTSAX and VTI if you live in the United States. First, you can open an account with Vanguard — the company that owns and operates these funds. You can do this by visiting their official website and clicking the “Open an Account” button located at the upper right corner of the site.

On the other hand, other brokers and financial services firms also offer access to these vehicles through their trading platforms or by incorporating them into a diversified portfolio of different asset classes.

Two brokers that will allow you to trade mutual funds including VTSAX are TradeStation and Firstrade. With regards to VTI, you have a lot more options including brokers like M1 Finance, Moomoo, and Robinhood.

TradeStationFirstradeMoomoo
Our Rating

4.2

4.1

3.8

Fees$0 per trade$0 per trade$0 per trade
Account Minimum$0$0$0
PromotionGet up to $5,000Get 3 Free StocksGet 5 Free Stocks Worth Up to $3,500
Mutual FundsyesyesNo
Exchange Traded Fundsyesyesyes

VTSAX and VTI Alternatives

Are VTSAX and VTI the only vehicles that offer broad exposure to the United States equity market? Not at all. Here are some alternatives you can consider if you would like to allocate a portion of your portfolio to US stocks without spending too much on commissions.

Charles Schwab Funds (SWTSX and SCHB)

Charles Schwab has two funds that should yield similar results to VTSAX and VTI. The SWTSX mutual fund charges an expense ratio of 0.03% and oversees a total of $18.5 billion on behalf of investors, as of November 2021.

The fund was launched in June 1999 and tracks the Dow Jones US Total Stock Market Index. The added advantage of SWTSX compared to VTSAX is that it does not require a minimum investment. Its 10-year performance currently stands at 16.5%.

Meanwhile, Schwab’s SCHB exchange-traded fund (ETF) would be the substitute for VTI with this provider. This fund currently oversees $23.2 billion for investors and was launched in November 2009. Its expense ratio stands at 0.03% and it tracks the Dow Jones US Broad Stock Market Index. In the past 10 years, it has yielded a 16.6% return to investors.

Fidelity Funds (FSKAX)

The Fidelity® Total Market Index Fund is a mutual fund owned and managed by Fidelity Investments, another US financial powerhouse. It currently manages around $75 billion in assets for investors and charges an expense ratio of 0.015%. 

No minimum investment is required to enter the fund and it tracks the Dow Jones US Total Stock Market Index. In the past 10 years, the fund has delivered a 16.05% annual return to investors.

iShares Funds (ITOT)

The iShares Core S&P Total US Stock Market ETF is a strong competitor of Vanguard’s VTI ETF, currently charging an expense ratio of 0.03% and overseeing around $45.6 billion in assets for investors. 

The fund was launched in January 2004 and it is managed by BlackRock. It tracks the performance of the S&P Total Market Index. In the past 10 years, the fund has generated a total return of 16.6%.


Frequently Asked Questions on VTSAX vs. VTI

The following section provides answers to some of the most frequently asked questions we get on the topic of VTSAX vs. VTI.

Which Is Better, VTSAX or VTI?

There are various reasons why VTI would be a better choice compared to VTSAX. First, the structure of VTI as an exchange-traded fund (ETF) allows it to be more tax-efficient than VTSAX. Moreover, there is no minimum investment required to invest in VTI compared to the $3,000 minimum required by VTSAX.

Do VTSAX and VTI Offer Dividends?

Yes. Dividends for both funds are paid quarterly. Currently, VTSAX’s 30-day SEC yield stands at 1.14%, while the same yield for VTI stands at 1.15%. 

Is VTI More Tax Efficient Than VTSAX?

In summary, yes. The structure of VTI — being an ETF — allows it to dodge the payment of unnecessary capital gains taxes that can ultimately affect the performance of the fund. However, from an investor’s standpoint, any capital gains obtained from selling these funds at a profit should be the same.

Can I Convert VTSAX to VTI?

Most Vanguard funds will allow investors to convert their fund shares into shares of a similar exchange-traded fund (ETF) without affecting their tax bill. However, it would be important to verify with a Vanguard representative if this applies to VTSAX and VTI specifically. 

Is VTSAX Better Than VOO?

Solely based on their performance, VOO has produced a 16.2% gain for investors in the past 10 years compared to the 16.6% produced by VTSAX. Aside from that, the two funds are different in many ways, starting with the fact that VOO tracks a different index, the S&P 500.


Final Thoughts

Investing in passively-managed products that track the performance of the US equity market has yielded positive results to investors in the past decades. 

The two vehicles mentioned above — VTSAX and VTI — are two of the best choices on the market for incorporating US stocks into a diversified investment portfolio and this review should have helped you in picking the best option for you based on your individual needs and preferences.

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