VT vs VTI: Which ETF Is Best For You?

We are going to explore the difference between Vanguard Total World Stock ETF (VT) vs Vanguard Total Stock Market ETF (VTI).

There is no shortage of options when it comes to investing in Exchange Traded Funds (ETFs).  Choosing between two funds can be difficult, but I will make it easy for you to decide between VT and VTI.

 

VT vs VTI

The primary difference between VT and VTI is the asset allocation of the exchange-traded fund (ETF).  VT has about 40% of its holdings in international stocks.  VTI is comprised of almost 100% U.S based companies.  Another significant difference is the number of stocks in each, with VTI having 3535 different companies in the index compared to 9299 with VT.

VTI:

• Tracks the performance of the CRSP US Total Market Index
• Has an expense ratio of 0.03%
• No minimum initial investment
• Holds 3535 stocks

VT:

• Tracks the performance of the FTSE Global All Cap Index
• Has an expense ratio of 0.08%
• No minimum initial investment
• Holds 9299 stocks

 

VT vs VTI Performance

VT and VTI have performed similarly over the last 10 years with VTI beating VT by around 4% annually.  That is a significant difference, especially when you consider compound interest on those returns.

Similarities between VT and VTI:

• Exchange-Traded Funds (ETFs)
• Low Expense Ratios
• Well Diversified

 

Here is how their performance compares:

As you can see, VTI has outperformed VT over the years.  However, this doesn’t necessarily mean this trend will continue.

 

VT and VTI Differences

VT vs VTI primarily differ in that VTI holds almost all U.S-based companies, while VT holds a collection of stocks from companies around the world including the United States.  VTI also has fewer holdings in the index compared to VT.  By investing in an ETF with more holdings you are helping diversify your portfolio and minimize risk.

Differences between VT and VTI:

• Different Number Of Holdings (~9299 vs ~3535)
• Expense Ratio (0.08% vs 0.03%)
• Level Of Diversification

 

VTI Profile

• Fund Inception: 2001
• Expense Ratio: 0.03%
• Number Of Stocks: 3535
• Top 10 Holdings: 23.9%

 

Here are the top 10 holdings for the Vanguard Total Stock Market ETF (VTI):

The fund, as of September 2021 has $1.3 trillion in total net assets.

VTI is largely made up of Apple, Microsoft, Google, Amazon, and Facebook and provides exposure to over 3000 stocks.  The top 10 holdings of VTI make up 23% of the ETF which is more than VT as we will see next.

 

No Minimum Investment

VT and VTI are both exchange-traded funds (ETFs) which means there is NO minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance. ***(Get $50 When You Use This Link)***

Normally, fractional shares are not available for ETFs but with M1 Finance you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  You no longer have to keep your money sitting idle until you have enough to purchase a full share.  This is especially beneficial when it comes to shares of VTI due to its high prices per share (~$238/Share).

 

VTI Historical Returns

Take a look at the historical chart below.  You can see that the returns for VTI and the S&P 500 have been nearly identical over the last 10 years.

However, be mindful that this does not guarantee the next 10 years will look the same.

 

VT Profile

• Fund Inception: 2008
• Expense Ratio: 0.08%
• Number Of Stocks: ~9299
• Top 10 Holdings: 14%

 

The Vanguard Total World Stock ETF (VT) provides investors with exposure to developed and emerging equity markets.  The ETF is comprised of companies located mostly in North America, emerging markets, and Europe.

VT was created in 2008 and currently has an expense ratio of 0.08% which makes it a low-cost ETF to own, however not as low as VTI (0.03% expense ratio).

However, the cost of owning VT over VTI won’t make a significant difference to an investor since they are both low-cost ETFs.  More importantly, is being able to achieve the asset allocation you desire as an investor (international vs domestic).

VT also has an equivalent Vanguard Admiral Fund which is Vanguard Total World Stock Index Fund Admiral Shares (VTWAX).

Moving on, here are the top 10 holdings for VT:

VT is largely made up of Apple, Microsoft, Google, Amazon, and Facebook.

Over the last 10 years, VT has underperformed the S&P 500 with an average return of 12% per year compared to 16.5% from the S&P500.

VT has about 32B in net assets.  It has underperformed over the last 10 years but again there is no guarantee the next 10 years look the same.

 

Which is Better VT or VTI?

VT and VTI are different investments.  VT offers more diversification since it holds about three times as many stocks.  However, this has resulted in a lower performance over the last 10 years.

Even so, I would say both are a great option for long-term investors.  If having an asset allocation that includes international stocks at the lowest fees helps you sleep at night, then VT would be a great option.  If you are looking for only U.S based companies to invest in, then VTI allows you to easily invest in all of them at a very low cost.

I think both VT and VTI can have a place in a long-term investors portfolio.

Lastly, it’s important to consider costs and fees because they can add up in the long run.  That’s why it’s so important to purchase and sell your shares commission-free.

Again a great way to do this is with M1 Finance or by using the Vanguard platform directly for these ETFs.  You can purchase fractional shares for free with M1 Finance and they give you the ability to buy VTI, VT, and thousands of other stocks/ETFs.

 

Is VT or VTI Better for Financial Independence?

Both VTI or VT can get you to Financial Independence Retire Early (FIRE).  They both have performed great and have low expense ratios.

Being part of the FIRE community I know we aim for the lowest fees possible and we’re a big fan of Vanguard.

 

My Winner: VTI

If I have to choose one winner it’s VTI for its diversification, lower expense ratio, and because of books like The Simple Path To Wealth.

However, as I mentioned I believe you can invest in both depending on your desired asset allocation.

Lastly, both ETFs are Vanguard funds which likely means they will continue to offer low-cost ETFs.

 

If you like comparisons like these, you can also look at some other popular ones like VTI vs VOO, VGT vs QQQ, and VTI vs QQQ.