VTI vs VOO: Which ETF is Better?

VTI vs VOO: Which ETF is Better?

Exchange-Traded Funds (ETFs) are commonly used investment options and today we are going to compare two very popular ETFs.

Today we are going to explore the difference between the Vanguard Total Stock Market ETF (VTI) vs Vanguard S&P 500 ETF (VOO).

 

VTI vs VOO

The primary difference between VTI and VOO is that VTI seeks to track the performance of the CRSP US Total Market Index.  While VOO seeks to track the performance of the S&P 500 Index.

VTI:

  • Tracks the performance of the CRSP US Total Market Index
  • Has an expense ratio of 0.03%
  • Holds 3551 stocks

VOO:

  • Tracks the performance of the S&P 500 Index
  • Has an expense ratio of 0.03%
  • Holds 508 stocks

 

This is how their performance compares over the last 10 years:

VTI vs VOO Performance

 

Are VOO and VTI the Same?

VOO and VTI are not the same. They aim to follow different indexes and have a different amount of stock holdings.  However, they are considerable overlap between the 2 ETFs, which makes their performance very comparable.

Similarities between VOO and VTI:

  • Exchange-Traded Funds (ETFs)
  • Performance is very similar
  • Rating of 4 out of 5 from Morningstar
  • Very low expense ratios
  • Similar holdings

 

VOO and VTI Differences

VOO and VTI primarily differ in that VOO tracks the S&P 500 index, which is about 80% of the total U.S. equity market capitalization.  VTI tracks the performance of the CRSP US Total Market Index and contains 7 times as many stocks making it more diverse.

Differences between VOO and VTI:

  • Index they seek to track
  • VOO has a slightly higher yield
  • VTI has over 3550 stock holdings

 

VOO Profile

  • Fund Inception: 2010
  • Expense Ratio: 0.03%
  • Number Of Stocks: 508
  • Top 10 Holdings: 24.8%

 

Vanguard S&P 500 ETF (VOO) received a big endorsement when Warren Buffett himself recommended it!

The fund, as of February 29, 2020, has $500.9 billion total net assets.

VOO is largely made up of Microsoft, Apple, Alphabet, Amazon, and Facebook, but also provides exposure to over 500 stocks.

VOO Holdings

 

No Minimum Investment

VOO and VTI are Exchange-Traded Funds (ETFs), which means they have no minimum investment.  The only minimum is the requirement to buy at least 1 full share.  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 stocks with high prices like Amazon, Google, and Tesla.

Try M1 Finance For Free

 

VOO Historical Returns

Take a look at the historical chart below. You will see VOO and the S&P 500 closely overlap:

VOO vs S&P 500 Performance

 

This correlated performance is expected and is what the ETF is designed to do.  VOO tracks the S&P 500 quite well.

My Choice For The Best S&P 500 ETF (VOO vs SPY)

VTI Profile

  • Fund Inception: 2001
  • Expense Ratio: 0.03%
  • Number Of Stocks: 3551
  • Top 10 Holdings: 20.7%

 

Vanguard Total Stock Market ETF (VTI) tracks the performance of the CRSP US Total Market Index.  VTI was created in 2001, it currently has an expense ratio of 0.03%, and offers exposure to over 3500 stocks.

VTI Holdings

 

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

Vanguard Total Stock Market ETF (VTI) is one of the most popular ETFs!  The reason is the rock bottom fees and the diversification it offers the everyday investor.

 

Which is Better VTI or VOO?

VTI and VOO are very similar investments. There are some advantages and disadvantages to both because they differ in the index they track and the number of stocks in the fund.

If I was a new investor, I would choose VTI because of the ability to have over 3550 stock holdings in one easy to own fund.  There is no easier way to create a diversified portfolio.

VTI vs VOO Graphic

 

Is VTI or VOO Better for Financial Independence?

VTI has been the favorite ETF for most in the FIRE Movement.  However, I would argue you really can’t go wrong with either investment.  Both VTI and VOO can get you to Financial Independence Retire Early (FIRE).  They both have a similar return on investment.

So, the more important part is your savings rate and if you are correctly Prioritizing Your Investments.  They are both Vanguard products so you can take advantage of commission-free purchases with a Vanguard account.

To help you decide you can ask yourself the following questions:

Do you want a more diversified fund?  VTI

Are you comfortable with the returns of the S&P 500? VOO

 

If you can’t decide you can always invest in both VOO and VTI like I do.

 

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