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

FAQs

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

Investment Strategies and Market Coverage: VTI offers broad exposure to the entire U.S. equity market, encompassing over 3,000 stocks across various sectors and market capitalizations. In contrast, VOO focuses on the large-cap segment, tracking the 500 largest U.S. companies represented in the S&P 500 Index.

Smaller company stocks can be considered riskier than large company stocks and may or may not perform better. You can see this in the difference between year-to-date returns of the funds. VTI is underperforming VOO & SPY by about 0.5% this year. In other years, VTI will outperform.

Vanguard High Dividend Yield ETF (VYM)

The better Vanguard ETF for their needs is likely VYM, which delivers a higher 2.9% 30-day SEC yield by targeting the FTSE High Dividend Yield Index. It also charges the same expense ratio as VIG does, at 0.06%.

VOO and VFIAX are both funds offered by Vanguard and they both seek to track the performance of the S&P 500, which is a market-cap-weighted index of the largest U.S. publicly traded companies.

Many people pair VOO with the Vanguard Total Bond Market ETF (BND) in a broader portfolio. The fixed income ETF has $95 billion in assets and is the largest bond ETF trading in the U.S. BND has two-thirds of its assets in U.S. government bonds, with most of the remainder in investment-grade corporate bonds.

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%.

1. Vanguard Growth ETF. The Vanguard Growth ETF is up 37.3% over the past year and an even better 59.1% since the start of 2023. One look at its holdings, and it's easy to see why.

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.

Which Vanguard fund is most aggressive? ›

Best Vanguard Funds for Aggressive Investors: Vanguard Mid-Cap Growth Index (VMGIX)

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

Average Return

In the past year, QQQ returned a total of 33.38%, which is significantly higher than VOO's 26.98% return. Over the past 10 years, QQQ has had annualized average returns of 18.82% , compared to 12.81% for VOO. These numbers are adjusted for stock splits and include dividends.

Since VTI and VOO are both ETFs, they have the same trading and liquidity, tax efficiency, and tax-loss harvesting rules. There are two key differences between VOO and VTI: the diversification strategy and performance. VOO invests in approximately 500 stocks, while VTI invests in over 3,500.

VTI vs VOO Overlap

As market-cap-weighted ETFs, the top 500 stocks in VTI make up a high percentage of the fund. VOO is also market-cap-weighted but only has 500 stocks. Therefore, there is a significant overlap between the funds. The top 500 stocks in VTI make up approximately 87% of the ETF's weighted holdings.

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.

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.

VTI vs VTSAX: Who Should Invest

Investors who prefer to trade during the day to take advantage of price fluctuations may prefer an ETF like VTI, whereas a more passive buy-and-hold investor may prefer a mutual fund like VTSAX.

You can't go wrong with either the Vanguard Total Stock Market ETF or the Vanguard S&P 500 ETF. Both offer very low expense ratios and turnover rates, and the difference in their tracking errors is negligible. The overlap in their holdings ensures that you'll get very similar returns going forward.

Which ETF performs the best? ›

Currently there's no upside potential for VTI, based on the analysts' average price target. Is VTI a Buy, Sell or Hold? VTI has a consensus rating of Moderate Buy which is based on 2350 buy ratings, 1217 hold ratings and 88 sell ratings.

Over the past three years, VTI has posted a total annualized return of 13.8%. Its five-year annualized return of 11.3% and 10-year annualized return of 12.3% are impressive as well. Investing in an ETF that has generated double-digit returns for an entire decade is a great way to build long-term wealth.