VOO vs VTI: Which ETF Is a Better Investment? - Stock Analysis (2024)

Passive investing in index funds is more popular than ever.

There is a good reason for this. Research shows that passively managed index funds provide higher returns than over 90% of active professional fund managers.

However, there are thousands of funds and hundreds of companies making them. Not all of them are equal.

Of the many companies that provide index funds, Vanguard is one of the biggest and most trusted. Millions of people invest in their funds, and they collectively have over $7.7 trillion in assets under management as of 2024.

Two of Vanguard's exchange-traded funds (ETFs) are particularly popular. Both of them provide exposure to the U.S. stock market:

  • VOO: This ETF tracks the and holds 505 stocks.
  • VTI: This is a more diversified ETF that holds all the S&P 500 stocks, but also many mid-cap and small-cap stocks. It holds 3,761 stocks in total.

This article examines the differences between VOO and VTI and which one is likely to be a better investment.

VOO: Vanguard S&P 500 ETF

  • Assets: $355.1 billion
  • Holdings:505 stocks
  • Dividend yield: 1.43%
  • Expense ratio:0.03%

The is one of the biggest index funds that tracks the S&P500, with over $300 billion in assets under management. It also has one of the lowest expense ratios, making it very popular among passive index investors.

Like other S&P 500 ETFs, it holds a market-cap weighted index of the 505 stocks in the S&P 500. All of these are U.S.-based companies that are categorized as "large-cap," meaning they have market capitalizations higher than $10 billion.

Even though the S&P 500 only represents 500 companies, some of them have two or more classes of stock. This explains why the index has 505 stocks, not 500.

An example of a company with two classes of stock is Alphabet, the parent company of Google, which trades as bothGOOGL and GOOG.

VTI: Vanguard total stock market ETF

  • Assets: $329.5 billion
  • Holdings: 3,761 stocks
  • Dividend yield: 1.39%
  • Expense ratio: 0.03%

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.

Unlike ETFs that follow the S&P 500, VTI also holds many mid-cap and small-cap stocks.

For this reason, VTI is considered to provide broader exposure to the U.S. stock market and is more diversified. However, because it is weighted by market cap, the biggest U.S. companies also constitute a very large percentage of the ETF's holdings.

Although VTI has over 3,000 more stocks than VOO, these are only a small percentage of the fund's holdings because their market caps are so small.

VOO vs. VTI: key differences

This is a summary of the key differences between VOO and VTI:

VOOVTI
IndexS&P 500CRSP U.S. Total Market
Assets$355.10 billion$329.50 billion
Stocks5053,761
Dividend yield1.43%1.39%
Expense ratio0.03%0.03%

Both ETFs have the same top 10 stock holdings:

  1. Apple (AAPL)
  2. Microsoft (MSFT)
  3. Amazon (AMZN)
  4. NVIDIA (NVDA)
  5. Alphabet (GOOGL)
  6. Facebook (META)
  7. Alphabet (GOOG)
  8. Tesla (TSLA)
  9. Berkshire Hathaway (BRK.B)
  10. UnitedHealth (UNH)

For VOO, the top 10 stocks amount to 31.53% of the ETF's holdings. For VTI, the same top 10 stocks amount to 27.24% of the holdings.

So, even though VTI is more diversified than VOO with exposure to mid-caps and small-caps, the biggest companies are still responsible for most of the returns.

VOO vs. VTI: performance

The biggest holdings are the same for VOO and VTI, so their performance in the past has been similar but not identical.

Here is the average annual performance for the two ETFs as of January, 2024:

VOOVTI
1 Year26.33%26.11%
3 Year9.97%8.44%
5 Years15.66%15.09%
10 Years12.00%11.44%

It is clear that VOO has had slightly better returns than VTI in the past few years, but the difference is so small that it is almost negligible.

For example, here's a chart that compares their performance from January 2011 to December 2023:

VOO vs VTI: Which ETF Is a Better Investment? - Stock Analysis (1)

Source: portfoliovisualizer.com

VOO has not only had slightly better returns, but it has also been somewhat less volatile.

This makes sense since mid-cap and small-cap stocks tend to be more volatile than large-cap stocks. They often go down significantly during market corrections.

Which ETF is the better investment?

In the past few years, VOO has had better investment returns and greater price stability than VTI.

Based on that, VOO has historically been a better investment than VTI. However, past performance is no guarantee that the same will continue to occur in the future.

For this reason, it is impossible to say with any certainty which one will be the better investment moving forward.

VOO has had slightly better returns in the past, but VTI is more diversified and provides broader exposure to the U.S. stock market.

The chances are high that the returns of these two ETFs will continue to be very similar in the future. Both have the same expense ratio and similar dividend yield, so you should choose whichever one you prefer based on the fund's strategy.

If you only want to own the biggest and safest companies, choose VOO. If you want broader exposure and more diversification, choose VTI.

Or, you could also invest in both, for example, by putting half in VOO and half in VTI.

Here's a summary of which one to choose:

  • If you want to own only the biggest and safest stocks, choose VOO.
  • If you want more diversification and exposure to mid-caps and small-caps, choose VTI.
  • If you can't decide, consider simply buying both of them (assuming that commissions are low or free).

However, keep in mind that both ETFs can be highly volatile as they are 100% invested in stocks. Sometimes they may go down 50% or even more, although long-term returns have historically always been good.

VOO vs VTI: Which ETF Is a Better Investment? - Stock Analysis (2024)

FAQs

VOO vs VTI: Which ETF Is a Better Investment? - Stock Analysis? ›

VTI - Performance Comparison. In the year-to-date period, VOO achieves a 7.94% return, which is significantly higher than VTI's 7.25% return. Both investments have delivered pretty close results over the past 10 years, with VOO having a 12.69% annualized return and VTI not far behind at 12.09%.

Is it better to invest in VTI or VOO? ›

Or, you could also invest in both, for example, by putting half in VOO and half in VTI. Here's a summary of which one to choose: If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI.

Which is more tax efficient, VOO or VTI? ›

Generally, ETFs will have a slight edge from a tax efficiency perspective. ETFs tend to distribute comparatively fewer capital gains to shareholders – these same gains are simply more challenging to manage efficiently from a mutual fund. Overall, VOO and VTI are considered to have the same level of tax efficiency.

Is VOO still a good long-term investment? ›

The Vanguard S&P 500 ETF (VOO 1.15%) is one of the best ways to invest in the S&P 500, which has been a pretty smart strategy over the long term. Since 1965, the S&P 500 has produced a total return of 10.2% annualized. The Vanguard ETF has an expense ratio of just 0.03%, so you get to keep most of your gains.

Which stock is better VTI or SPY? ›

VTI vs. SPY Summary
VTISPY
Trading and LiquidityDaily trading during Market HoursDaily trading during Market Hours
Performance26.05% in 202326.19% in 2023
Dividend Yield1.54% in 20231.52% in 2023
9 more rows
Mar 26, 2024

What is Vanguard's best performing ETF? ›

10 Best-Performing Vanguard ETFs
TickerCompanyPerformance (1 Year)
VOXVanguard Communication Services ETF29.18%
VGTVanguard Information Technology ETF27.19%
VFMOVanguard U.S. Momentum Factor ETF26.75%
VOOGVanguard S&P 500 Growth ETF24.58%
6 more rows
5 days ago

Is VTI a good long-term investment? ›

If you're looking for an ETF with a low expense ratio and an attractive annual return rate, VTI might be a good pick. The expense ratio is only 0.03%, and the 10-year annual average return rate is above 12%.

What ETF is better than VOO? ›

What's the best S&P 500 ETF?
ETFTickerAnnualized 5-year return
iShares Core S&P 500 ETFIVV15.01%
SPDR S&P 500 ETF TrustSPY14.14%
Vanguard S&P 500 ETFVOO13.15%
5 days ago

Does VOO or VTI pay more dividends? ›

VTI - Dividend Comparison. VOO's dividend yield for the trailing twelve months is around 1.36%, less than VTI's 1.40% yield.

Which ETF is most tax-efficient? ›

Top Tax-Efficient ETFs for U.S. Equity Exposure
  • iShares Core S&P 500 ETF IVV.
  • iShares Core S&P Total U.S. Stock Market ETF ITOT.
  • Schwab U.S. Broad Market ETF SCHB.
  • Vanguard S&P 500 ETF VOO.
  • Vanguard Total Stock Market ETF VTI.

Why SPY over VOO? ›

VOO earns a top rating of Gold, while SPY earns the next best rating of Silver. Almahasneh says the reason is fees. VOO charges 0.03%, while SPY charges 0.09%. With all else equal, the fund with the lower fee is more aligned with investors' best interests.

Which ETF has the best 10 year return? ›

Top 10 ETFs by 10-year Performance
TickerFund10-Yr Return
VGTVanguard Information Technology ETF19.60%
IYWiShares U.S. Technology ETF19.58%
IXNiShares Global Tech ETF18.20%
IGMiShares Expanded Tech Sector ETF17.95%
6 more rows

Why is VOO so popular? ›

The Vanguard S&P 500 ETF (VOO) is an exchange-traded fund (ETF) that tracks the S&P 500 index, a stock index containing about 500 of the largest publicly traded companies in the U.S. S&P 500 ETFs are popular among investors, as they provide a great deal of investment diversification within a single fund.

Why is VTI so popular? ›

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.

What is better than VTI? ›

VOO has outperformed VTI over the past 10 years, but only slightly as of writing. However, VOO has a greater concentration of risk exposure in the top 10 holdings and funds altogether. But the risk is minimal since the S&P 500 is a broad index already.

Is qqq better than VOO? ›

Average Return

In the past year, QQQ returned a total of 38.17%, which is significantly higher than VOO's 27.27% return. Over the past 10 years, QQQ has had annualized average returns of 18.33% , compared to 12.56% for VOO. These numbers are adjusted for stock splits and include dividends.

Should I invest in ETF or S&P 500? ›

Key Takeaways. Dividend ETFs invest in high-yielding dividend stocks to maintain a stable, steady income. The S&P 500 is a broad-based index of large U.S. stocks, providing growth and diversification. The best choice for you will depend on whether you prefer income or growth from your investments.

Is VOO too expensive? ›

VOO charges 3 basis points, while SPY charges 9 basis points. Both are very low cost compared to the average ETF in the US market.

Which ETF is better to invest? ›

Top sector ETFs
Fund (ticker)YTD performanceExpense ratio
Vanguard Information Technology ETF (VGT)8.6 percent0.10 percent
Financial Select Sector SPDR Fund (XLF)12.4 percent0.09 percent
Energy Select Sector SPDR Fund (XLE)13.5 percent0.09 percent
Industrial Select Sector SPDR Fund (XLI)10.8 percent0.09 percent

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