VTSAX vs VOO: Which Is Best?

We will explore the difference between Vanguard Total Stock Market Index Fund (VTSAX) vs Vanguard S&P 500 ETF (VOO).

When it comes to investing, there is no shortage of fund options.

Choosing between two funds can be difficult, but I will make it easy for you to decide between VTSAX vs VOO.

 

VTSAX vs VOO

The primary difference between VTSAX and VOO is that VTSAX is an index fund while VOO is an Exchange Traded Fund (ETF).

Both are low-cost funds, with VTSAX having an expense ratio of 0.04% and VOO having an expense ratio of 0.03%.

Lastly, VOO and VTI track different indexes.  VTI tracks CRSP US Total Market Index, while VOO tracks the S&P 500 Index.

VTSAX:

• Tracks the CRSP US Total Market Index
• Expense Ratio: 0.04%
• $3,000 minimum initial investment
• Holds 3,535 stocks

VOO:

• Tracks the S&P 500 Index
• Expense Ratio: 0.03%
• No Fractional Shares
• Holds 508 stocks

 

VTSAX vs VOO Performance

VOO and VTSAX are not the same funds.  They have different fund numbers and track different indexes.  However, they are very similar in their performance returns over 10 years.

Similarities between VOO and VTSAX:

• Vanguard Funds
• Similar Performance
• Broad Diversification
• Low Expense Ratios

Here is how their performance compares over the last 10 years: (VTSAX on the left, VOO on the right)

As you can see from the chart, they perform almost identically, with VOO outperforming slightly.

 

VOO and VTSAX Differences

The main difference between VOO and VTSAX is that VOO is an exchange-traded fund tracking only the S&P 500.  On the other hand, VTSAX has total U.S. diversification.

Vanguard has an ETF version of VTSAX, the Vanguard Total Stock Market ETF (VTI).  VTSAX is an admiral index fund with a $3,000 minimum initial investment and a lower expense ratio than non-admiral funds.

Differences between VOO and VTSAX:

• Minimum Initial Investment
• Classified as an Admiral fund (VTSAX)
• Exchange-Traded Fund (VOO)
• Different Number Of Holdings

 

VOO Profile

• Fund Inception: 2010
• Expense Ratio: 0.03%
• Number Of Stocks: 508
• Top 10 Holdings: 30%
• Dividend Yield: 1.35%
• Equivalent Admiral Fund (VFIAX)

Vanguard S&P 500 ETF (VOO) is a very popular ETF that tracks the S&P 500 index.  VOO has over $816 billion in fund total net assets.

The fund invests in various sectors and has a low expense ratio.

 

VOO Performance

Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.  Therefore, VOO and the S&P 500 should always overlap.

Here is VOO and the S&P 500 Index performance chart:

VOO (Blue)                S&P 500 (Yellow)

As you can see, VOO and the S&P 500 overlap in performance.

This should be an expectation in the future.

 

VOO Top 10 Holdings

VOO holds Apple, Microsoft, Alphabet, Amazon, Tesla, and over 500 other stocks.

The fund has $500 billion in total net assets.

 

No Minimum Investment

VOO is an exchange-traded fund which means there is NO minimum investment.  Instead, investors looking to buy fractional shares can invest in Vanguard 500 Index Fund Admiral Shares (VFIAX), the equivalent index fund.

Usually, fractional shares are not available for ETFs except with M1 Finance.  (Get $100 When You Use This Link)

M1 Finance allows you to purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  You no longer have to keep your money idle until you have enough to purchase a full share.

This is especially beneficial for stocks with high prices, like Amazon, Google, and Tesla.

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’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: 3,535
• 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 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.

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

 

VTSAX Holdings

Vanguard’s VTSAX comprises Apple, Microsoft, Google, Amazon, and Tesla, providing exposure to over 3,500 stocks.

Here are the top 10 holdings for VTSAX:

Major sectors in the index include:

• Healthcare
• Technology
• Consumer Services
• Financials
• Industrials

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

 

$3,000 Minimum Investment

VTSAX used to have a minimum initial investment of $10,000, but this changed to $3,000 in 2018.  Once you save up the $3,000 minimum, each investment after that does not have a minimum.

You can avoid this minimum investment threshold through retirement account contributions or investing in Vanguard Total Stock Market ETF (VTI).

 

Index Funds vs Exchange Traded Funds (ETFs)

Exchange-traded funds (ETFs) are usually a more accessible option for new investors since they don’t have a minimum investment.  In comparison, if you can afford to invest more than the minimum, it’s usually a better option to choose admiral index funds because they have a lower expense ratio.

In this case, the expense ratio is almost the same, only differing by 0.01%.

ETFs are also available to trade at any time the market is open.  Index funds are bought after the market closes and the price settles.  Depending on your views, this can be a good or bad thing.

For long-term investors, the ability to trade anytime in the day is not a benefit.  Instead, it can encourage market timing and frequent trading.

An index fund might be a better option if you have these tendencies.

Lastly, if you prefer to have every penny invested, then you will like that Index funds offer fractional share buying.

On the contrary, ETFs must be bought one full share at a time.  That can sometimes lead to uninvested money while waiting for your next contribution.

This is more of a preference since I don’t think it will significantly affect your returns.

 

Which is Better VTSAX or VOO?

VTSAX and VOO are very similar investments.  Since VTSAX is an admiral share fund, it offers very low expense ratios and the ability to purchase fractional shares.

VTSAX also offers more diversification since it holds about 7 times more stocks.

VOO did slightly outperform VTSAX.  However, past performance isn’t an indication of future returns.

For those reasons, I would give the advantage to VTSAX over VOO.

Related Posts:

• FXAIX vs VOO
• VOO vs VGT
• QQQ vs VOO
• VTSAX vs VTI
• SWTSX vs VTSAX
• VTSAX vs FSKAX
• FXAIX vs VTSAX

 

Is VTSAX or VOO Better for Financial Independence?

VTSAX and VOO can get you to Financial Independence Retire Early (FIRE).  They both have a similar return on investment and have rock-bottom expense ratios.

So, either option is an excellent investment for financial independence.  I own both.

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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