Mutual funds, index funds, and exchange traded funds should be a staple for any serious investors’ portfolio. Both are safer investments than any individual stock and can offer diversification. You can spend hours or days sifting through hundreds if not thousands of different funds. Or, you can go with two tried and true funds, VTI vs VOO.
There’s no doubt that Vanguard offers some of the most popular mutual funds and ETF’s out there. Two of these options are VTI (Vanguard Total Stock Market Index ETF) and VOO (Vanguard S&P 500 EFT). There’s nothing saying you can invest into both of these funds, but which one is better?
VTI vs VOO: Issuer
When looking at VTI vs VOO from an issuer standpoint, there is no difference. Both VTI and VOO are Vanguard funds. If you haven’t heard of Vanguard, then you’ve likely been living under an investing rock somewhere.
Headquarter in Pennsylvania, Vanguard is the largest issuer of mutual funds in the world. It’s also the second-largest issuer of exchange-traded funds. With over 7 trillion in total assets under management (AUM), Vanguard is only behind BlackRock in that category.
It’s safe to say that Vanguard is not a fad or fly-by-night investing firm. Founded in 1975, it has over 45 years of history and industry experience to give you the confidence you need to invest with them.
VTI vs VOO: Underlying Index Followed
VTI looks to track the CRSP US Total Market Index. What this means is that it will tend to track the market as a whole. As the market rises and falls, so will VTI. Typically, tracking the market as a whole means a fund will have thousands of different stocks that are of different cap sizes (small cap stocks, midcap, and large cap) and in several different sectors. These stocks will also tend to be spread across several growth and value styles as well.
VOO on the other hand aims to track the S&P500 market index. The S&P 500 aims to tracks the 500 leading publicly traded US companies. Market cap is the primary criterion for a company to be included in the S&P 500 index fund, but it is not the only criterion.
When looking at VTI vs VOO, since the VOO tracks only 500 stocks, it will be less diversified than VTI. However, tracking the S&P 500 is considered one of the best investment strategies around.
VTI vs VOO: Expense Ratios
Another aspect you should consider when investing in any mutual fund should be it’s the expense ratio. A fund’s expense ratio can be a vital piece of information as it can affect your total returns. Essentially, when funds are managed, there are expenses that go along with it. This could be salaried to pay analysts or portfolio managers, management fees, rent for office space, and many others. Typically, these costs are passed to the investors. The amount of the costs is included in the expense ratio.
Looking at VTI vs VOO from an expense ratio standpoint draws another stalemate. Both funds are passively managed and act more like index funds. When a fund is passively managed, the costs and fees associated with it can be dramatically reduced.
Both VTI and VOO have some of the lowest expense ratios you’ll find and a measly .03%. This means for every $1000 you invest, you’ll incur $3 of fees, not too shabby if you ask me.
VTI vs VOO: Minimum Initial Investments
Minimum initial investments vary across different funds and firms. It should be noted that the keyword here is initial investments. Many funds require anywhere from $100 – $5000 or more for your first investment only. After that, you are free to invest any amount you wish on subsequent investments with the same fund.
Again, VTI vs VOO brings a draw in this comparison. Both funds require a minimum initial investment of the current asking price for one share of the fund.
Even though they both require the purchase of one share does not mean they are 100% equal in this category. As of writing this, VTI currently stands at roughly $224 a share while VOO sits at a much high $409. Depending on how much you were looking to invest could change which is better for you to start with.
VTI vs VOO: Net Assets and Holdings
Comparing VTI vs VOO, each fund’s top ten holdings are identical, see below. The main difference here is that while holding the same funds, VTI holds roughly 24.7% of its 1.3 trilliion (321.1. billion) in total assets in these stock. In comparison, VOO holds about 29.5% of its 808.8 billion in the top ten holdings, which is roughly 238.6 billion.
VTI vs Voo Top Holdings:
|Alphabet Inc. Cl A||GOOGL|
|Berkshir Hathaway Inc. Cl B||BRK.B|
|Meta Platforms Inc.||FB|
|UnitedHealth Group Inc||UNH|
|Johnson & Johnson||JNJ|
VTI vs VOO: Compositions
One of the areas in which the VTI vs VOO comparison will differ is in the fund’s composition. As mentioned earlier, VTI aims to track the total market. To do this, there are over 4000 different individual stocks that are a part of the fund. These stocks can be small cap, mid cap, or large cap stocks. The stocks will also have a wide array of growth and value styles.
VOO on the other hand aims to track the S&P500, so the number of individual stocks is much less than VTI. There are about 507 stocks in VOO, mostly large-cap and geared toward growth. Fewer stocks could mean more volatility with VOO when there is more market volatility in general.
VTI vs VOO: Sector Allocations
VTI vs VOO is similar in sector allocations as well. As you’ll see below they share many of the same sectors, with a few exceptions. The percentage of each fund’s allocations into each sector also vary but remember that VTI holds about 500 billion more in assets, to the actual amounts of money invested may be closer or further apart than you might first think.
VTI Sector Allocations:
VOO Sector Allocations:
VTI vs VOO: Overall Performance
So what does everything really come down to for most investors? Performance, of course! No matter what fund you invest in, it’s definitely good to know everything we’ve gone over until now, but the bottom line is always how the fund performs.
Returns is where I think we’ll see a clear winning in VTI vs VOO, see below:
VTI Overal Performance:
VOO Overall Performance:
Here we see that VOO has consistently outperformed VTI, which remember holds fewer assets. One of the reasons for this could be that VOO holds mostly large cap stocks aimed for growth. While the overall numbers show it has better growth potential, that also means during downward markets, its losses will likely be larger as well.
VTI vs VOO: Which is better?
If you’re going by overall performance, in the matter of VTI vs VOO, then VOO takes home the prize in this case. Perhaps if you are looking for something that is a little safer and more stable, the VTI could be your winner here. In any case, there are no losers when in investing in VTI vs VOO.
VTI vs VOO: Final Thoughts
Both funds are backed by one of the largest asset managers in the world in Vanguard and are excellent additions to anyones investment portfolio. Each fund also has low expense ratios. Really, it comes down to if you want a broader range of stocks vs the top 500 in the stock market. No matter which you choose (or both if you want), everyone goes home a winner!
More VTI vs VOO analysis here.
Jeff is a fan of all things finance. When he’s not out there changing the world with his blog, you can find him on a run, a Mets game, playing video games, or just playing around with his kids.