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VTSAX vs SPY: Which Should You Choose?

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We Compare VTSAX vs SPY:

Vanguard Total Stock Market Index Fund (VTSAX) vs SPDR S&P 500 ETF Trust (SPY)

Investors may find it difficult when it comes to choosing between VTSAX vs SPY.  They are both great funds and popular among investors.

Vanguard Total Stock Market Index Fund, VTSAX, has over $1 trillion in total net assets and has become a favorite of the FIRE community.

SPDR S&P 500 ETF Trust, SPY, gives investors exposure to 500 of the largest companies in the United States and accounts for about three-quarters of the U.S stock market’s value.

Having said that, VTSAX and SPY are not the same.

I’ll help break down their differences.

VTSAX vs SPY Graphic

 

VTSAX vs SPY

The primary difference between VTSAX and SPY is the brokerage that issues the fund.  VTSAX is a Vanguard fund while SPY is a fund from State Street Global Advisors Trust Company.

VTSAX is a Vanguard fund

SPY is a State Street Global Advisors Trust Company fund

Another major difference is the index these funds track.

VTSAX tracks the CRSP US Total Market Index

SPY tracks the S&P 500 Index

Vanguard’s VTSAX is a total market fund that includes 80% SPY while the other 20% is a mixture of small to mid-cap stocks.

Both funds are incredibly popular with long-term investors.

VTSAX

  • Fund Inception: 2000
  • Tracks the CRSP US Total Market Index
  • Expense Ratio: 0.04%
  • Vanguard Fund
  • Minimum Initial Investment: $3,000
  • Number Of Stocks: 3535
  • Equivalent ETF (VTI)

SPY

  • Fund Inception: 1993
  • Tracks the S&P 500 Index
  • Expense Ratio: 0.09%
  • State Street Fund
  • Number Of Stocks: 506
  • Top 10 Holdings: 28%
  • Yield 1.2%
  • Similar ETF (VOO)

Both VTSAX and SPY have low expense ratios however, VTSAX’s expense ratio is lower than SPY.

VTSAX expense ratio is 0.04%

SPY expense ratio is 0.09%

Lastly, SPY is an ETF while VTSAX is an Index Fund.  This means you can trade SPY intraday while VTSAX only trades once a day after the markets close.

 

VTSAX vs SPY Performance

VTSAX and SPY have had similar performance returns over the last 10 years.  The difference in performance returns is only 0.38% annually over 10 years.

VTSAX vs SPY Performance

As you can see VTSAX and SPY performance are similar.  Their performance chart overlaps over the last 10 years.

 

VTSAX vs SPY Expense Ratio

The difference in expense ratio between VTSAX and SPY is only 0.05%.  Vanguard’s VTSAX has an expense ratio of 0.04% while SPY has an expense ratio of 0.09%.

Example:

Assuming you start with an initial investment of $100,000 and contribute $10,000 each year, over the 30 years.

You will have $41,000 less in your account because of the extra 0.05% expense ratio.

This difference for a long-term investor could be considered significant.

Winner: VTSAX with the lowest expense ratio of 0.04%

 

VTSAX Minimum Investment

For a first-time investment in VTSAX, you need to have a minimum of $3,000.  After that, you are at liberty to invest any amount you want.

As a first-time investor in SPY, you only need to have the price of one share as a minimum investment.  This means that if SPY’s share price is $50, you can invest in the fund with as little as $50.

So if you are starting small your best choice might be SPY.

As an alternative, you could invest with no minimum requirement into VTSAX’s ETF equivalent, which is VTI, through the Vanguard platform or M1 Finance. (Use this link for a $50 Bonus)

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital Retirement Fee Analyzer

Personal Capital’s free tools allow you to easily find which of your investments has high fees so that you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

VTSAX Profile

  • Fund Inception: 2000
  • Tracks the CRSP US Total Market Index
  • Expense Ratio: 0.04%
  • Vanguard Fund
  • Minimum Initial Investment: $3,000
  • Number Of Stocks: 3535
  • Equivalent ETF (VTI)

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) represents close to 100% of the U.S. equity market that is publicly traded.  It also tracks the CRSP U.S. Total Market Index.

Vanguard’s VTSAX has an expense ratio of 0.04%.

This notably implies that the fund has limited exposure to several international stocks.

However, this does not in any way affect the companies represented in the fund.  These stocks have a significant international presence.

 

VTSAX Performance

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is popular for so many reasons of which consistent returns are a major part.

VTSAX Performance Chart

Its risk level is similar to that of the S&P 500.

VTSAX Performance Chart

 

VTSAX Holdings

Vanguard’s VTSAX is largely made up of Apple, Microsoft, Google, Amazon, and Tesla but also provides exposure to over 3500 stocks.

Here are the top 10 holdings for VTSAX:

VTSAX Top 10 Holdings

Major sectors in the index include:

  • Healthcare
  • Technology
  • Consumer Services
  • Financials
  • Industrials

The top 10 holdings make up 25% of its total net assets.

 

SPY Profile

  • Fund Inception: 1993
  • Tracks the S&P 500 Index
  • Expense Ratio: 0.09%
  • Number Of Stocks: 506
  • Top 10 Holdings: 28%
  • Yield 1.2%

SPDR S&P 500 ETF Trust (SPY) tracks the performance of the Standard & Poor’s 500 Index (S&P 500).

SPY was created in 1993, which makes this the oldest ETF around.  SPY is also one of the most popular ETFs funds available.

It currently has an expense ratio of 0.09% and offers exposure to over 500 stocks.

 

SPY Performance

Over the last 10 years, SPY has had an average return of 15% annually.  This is almost the same as the performance of the S&P 500 over the same time frame.

The goal of SPY is to mirror the results of the S&P 500 index.

Here is the growth of $10,000 over 10 years with SPY:

SPY Performance Chart

 

SPY Holdings

The top 10 holdings for SPY make up 28% of its total assets.

These are the top 10 holdings for SPY:

SPY Top 10 Holdings

SPDR S&P 500 ETF Trust (SPY) is largely made up of Apple, Microsoft, Amazon, Google, and Tesla.  However, it also provides exposure to over 500 other stocks.

 

Which Is Better VTSAX vs SPY?

VTSAX and SPY are both very good investments depending on your investment goals.  They are also both low-cost funds with a history of strong returns.

The answer of which is better depends on your goals and the brokerage you prefer to use.

To make it easier to decide I’ll lay out the advantages of both of them:

VTSAX Advantages:

  • Has An Equivalent ETF (VTI)
  • Vanguard Brokerage (Investor Owned)
  • Lower Expense Ratio
  • Increased Diversification (More Holdings)

SPY Advantages:

  • No Minimum Investment
  • Trades Intraday
  • Exchange-Traded Fund (ETF)

Having said that, I believe both VTSAX and SPY can be great investment options and get you to Financial Independence Retire Early (FIRE).

They both have rock bottom expense ratios (0.04% vs 0.09%).  So, either option is a great investment for financial independence.

After keeping fees to a minimum, you can work on increasing your savings rate and prioritizing your investments.

Then, you will be well on your way to Financial Independence and Early Retirement!

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My Winner: VTSAX

SPY and VTSAX can be great long-term investments.  They both have a similar return on investment.

However, commissions and fees can add up over the long term.

So, for those reasons I prefer VTSAX.

VTSAX is lower cost and more diversified compared to SPY

VTSAX also provides higher liquidity with over $1 trillion in total net assets compared to 408 billion with SPY.

If you already have a Vanguard account it makes sense to go with VTSAX or VTI for the ability to purchase the fund or ETF commission-free.

You can also use M1 Finance. (Use this link for a $50 Bonus)

Vanguard also has some of the lowest fees and best index funds available overall.

I chose to invest in VTSAX instead of SPY because of the increased diversification and lower expense ratio.

Having said that, you should consider your investment goals when deciding between the two funds.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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