You are currently viewing VTV vs VTI: Which Vanguard ETF Is Better?

VTV vs VTI: Which Vanguard ETF Is Better?

  • Reading time:17 mins read

We are going to explore the difference between VTV vs VTI:

Vanguard Value ETF (VTV) vs Vanguard Total Stock Market ETF (VTI)

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 to decide between VTV vs VTI.

VTV vs VTI Graphic Comparison

 

VTV vs VTI

The primary difference between VTV and VTI is that VTI tracks the CRSP U.S Total Market Index, while VTV tracks the CRSP U.S Large Cap Value Index.

Another significant difference is the number of stocks in each ETF.  For example, VTI has 4,091 different companies in the index compared to 352 with VTV.

VTV and VTI have different expense ratios.

VTV has an expense ratio of 0.04%

VTI has an expense ratio of 0.03%

This expense ratio means VTV is more expensive than VTI.  Although, the difference is only 0.01% which can be considered insignificant to some investors.

VTV

  • Tracks the CRSP U.S Large Cap Value Index
  • Expense Ratio 0.04%
  • No Minimum Investment
  • Holds 352 Stocks
  • Dividend Yield 2.32%

VTI

  • Tracks the CRSP U.S Total Market Index
  • Expense Ratio 0.03%
  • Holds 4,091 Stocks
  • Equivalent Admiral Fund (VTSAX)
  • Dividend Yield 1.39%

 

VTV vs VTI Performance

VTV and VTI have had similar performance returns over the last 10 years, with VTI beating VTV by 0.75% annually.  This difference can be considered significant, especially when you consider compound interest on those returns.

Here is how VTV and VTI performance compares:

VTV vs VTI Performance

This is a performance chart comparing VTV and VTI:

VTV vs VTI Performance Chart

As you can see, VTV and VTI have performed similarly over the long term but drastically different over the last year.  However, VTI is still beating VTV in performance over the last 10 years.

This doesn’t necessarily mean this trend will continue.

Similarities between VTV and VTI:

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

 

VTV and VTI Differences

The main difference between VTV and VTI is that VTI tracks the CRSP US Total Market Index, while VTV tracks the CRSP US Large Cap Value Index.  In addition, VTI holds 4,091 U.S companies while VTV holds 352 large-cap value companies in the U.S.

VTV is a Large Cap Value ETF

VTI is a Large Blend ETF

Therefore, VTI has more holdings compared to VTV because VTV focuses on the value companies that are in VTI.

VTV vs VTI Comparison Chart

By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.

Differences between VTV and VTI:

  • Asset Allocation (Large-Cap Value Only vs Value and Growth)
  • Different Number Of Holdings (352 vs 4,091)
  • Expense Ratio (0.04% vs 0.03%)
  • Level Of Diversification

 

VTV vs VTI Holdings

Vanguard’s VTI has more holdings than VTV (4,091 vs 352).  VTV and VTI also have different top 10 holdings.

The difference is that VTV’s top 10 holdings are made up of value companies and exclude growth companies like Apple, Amazon, and Tesla.  VTV’s top 10 holdings make up 21% of its total holdings compared to 22% with VTI.

This difference makes VTV less diversified compared to VTI because investors are excluded from growth companies that have dominated over the last 10 years.

VTI will also have more volatility depending on the performance of these 10 holdings.

Here are VTV and VTI’s top 10 holdings side by side:

VTV vs VTI Holdings

VTV and VTI’s top 10 holdings overlap with Berkshire Hathway and UnitedHealth.

 

VTI and VTV Holdings Overlap

There is an overlap between VTI and VTV that includes 347 stocks.  Roughly 9% of VTI’s holdings are in VTV, and 99% of VTV’s holdings are in VTI.

Here are VTI and VTV holdings overlap:

VTV vs VTI Holdings Overlap

 

There is overlap by weight of about 44%:

Overlap By Weight

VTI has more diversification compared to VTV.

 

VTV Profile

  • Fund Inception: 2004
  • Expense Ratio: 0.04%
  • Number Of Stocks: 352
  • Top 10 Holdings: 21%

The Vanguard Value ETF (VTV) tracks the CRSP U.S Large Cap Value Index. The index selects stocks from the top 85% of market capitalization based on multiple value factors.

Vanguard Value ETF has an MSCI ESG Fund Rating of AA based on a score of 7.40 out of 10.

The ETF holds companies in North America.

VTV launched in 2004 and currently has an expense ratio of 0.04%.  This expense ratio makes it a low-cost ETF to own, but not as low as VTI (0.03% expense ratio).

The cost of owning VTV over VTI won’t make a significant difference since they are both low-cost ETFs.

More importantly, is being able to achieve the asset allocation you desire.

VTV’s equal Admiral Fund is the Vanguard Value Index Fund Admiral Shares (VVIAX).

 

VTV Performance

Vanguard’s VTV aims to track the CRSP US Large Cap Value Index, covering domestic large-cap value equities.  VTV has the potential to provide steady returns but comes with less diversification than other broad markets ETFs.

Here is VTV’s performance chart:

VTV Performance Chart

VTV Performance

As you can see, VTV has had strong growth over the last 10 years.

However, in the previous 10 years, VTV has underperformed compared to the S&P 500, with an average return of 12% per year.

 

VTV Holdings

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

VTV Holdings

VTV is primarily made up of Berkshire Hathaway, UnitedHealth, Johnson & Johnson, JP Morgan, and Proctor & Gamble.

VTV has about $151 billion in net assets.

 

No Minimum Investment

VTI and VTV are exchange-traded funds (ETFs), so there is no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.

Usually, 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.  This is great for shares of VTI due to its high price per share.

There are two easy ways to invest in VTI or VTV commission-free.

  1. Vanguard
  2. M1 Finance (Use this link for $50 when you open a new account)

Both of these options are free.  This is important because fees can lower our returns.

I like M1 Finance as the best option because it gives you the flexibility to purchase VTI, VTV, and thousands of other stocks.

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)

 

VTI Description

  • Fund Inception: 2000
  • Tracks the CRSP US Total Market Index
  • Expense Ratio: 0.03%
  • Vanguard ETF
  • No Minimum Investment
  • Number Of Stocks: 3535
  • Admiral Shares (VTSAX)

Vanguard Total Stock Market ETF (VTI) represents close to 100% of the U.S. equity market.  It also tracks the CRSP U.S. Total Market Index.

Vanguard’s VTI has an expense ratio of 0.03%.

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

Yet, this does not in any way affect the companies represented in the fund.  Moreover, these stocks have a significant international presence.

 

VTI Performance

Vanguard Total Stock Market ETF (VTI) is famous for so many reasons, of which consistent returns are a significant part.

VTI Performance Chart

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

VTI vs S&P 500 Performance Chart

 

VTI Holdings

Vanguard’s VTI is primarily made up of Apple, Microsoft, Google, Amazon, and Tesla and provides exposure to over 3500 stocks.

Here are the top 10 holdings for VTI:

VTI Top Holdings

Major sectors in the index include:

  • Technology
  • Healthcare
  • Consumer Services
  • Financials
  • Industrials

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

 

Which Is Better VTV or VTI?

Both VTV and VTI are great long-term investments.  VTI offers a similar asset allocation and increased diversification at a lower cost of only 0.03%.

As we saw earlier, VTV underperformed VTI by 0.75% annually.  If those returns continue for the next 10 years it would make the higher cost of VTV not worth it.

However, we can’t be sure VTV will continue to underperform VTI since past performance does not predict future returns.

That said, since we don’t know if value or growth will perform better, it might be best to go with a blend of both like VTI.

This way your portfolio grows regardless of the next trend in the market.

For those reasons, I would say VTI is the better option.

It gives you similar returns at a guaranteed lower cost.

It comes down to VTI being more diversified compared to VTV.

A similar fund to VTV is the Vanguard S&P 500 Value ETF (VOOV). VOOV has a similar profile and returns but with a higher expense ratio (0.10%).

Lastly, I think both VTV and VTI can have a place in a long-term investment portfolio.

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 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, VTV, and thousands of other stocks/ETFs.

 

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 better to choose Vanguard admiral index funds because they typically have a lower expense ratio.

In this case, the expense ratio is the same or better with the ETF version of VTV and VTI.

Their matching admiral funds are:

VTV = Vanguard Value Index Fund Admiral Shares (VVIAX)

VTI = Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

ETFs are also available to trade at anytime the market is open.  Index funds trade 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.  On the contrary, it can encourage bad habits like market timing and frequent trading.

If you have these tendencies, an index fund might be a better option.

If you prefer to have every penny invested, you will like that index funds offer fractional share buying on the Vanguard platform.

On the contrary, ETFs have to be bought one total share at a time unless you are using a platform like M1 Finance.

That can sometimes lead to money left uninvested while waiting for your next contribution.

This is more of a preference since I don’t think it will make a significant difference in your returns.

Related Posts:

 

Is VTV a Good ETF?

VTV is a good ETF in tax-advantaged accounts to minimize tax on dividends.  This is because of its larger dividend yield of 2.32%.

Investments with high dividend yields in taxable accounts can create a tax drag on your portfolio.

This can lower your total returns over your investing lifetime.

Generally, it is better to put:

High Dividend ETFs Like VTV In Retirement Accounts (Tax Sheltered Accounts)

Low Dividend ETFs In Taxable Accounts

Doing this can help you pay fewer taxes over time.

 

Is VTV or VTI Better for Financial Independence?

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

JL Collins FIRE Calculator

Calculate Your FI Number With My Free FIRE Calculator

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

 

My Winner: VTI

My winner is VTI, based on it having a more diversified portfolio with 4,091 holdings and a lower expense ratio of 0.03%.

Regardless of whether you choose VTI or VTV, the important part is investing regularly in low-cost funds over the long term.  That is the formula for wealth!

As I mentioned, you can invest in both depending on your desired asset allocation.

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

If you like ETF comparisons like these check out more in our related posts below.

 


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.
Fat FIRE: Early Retirement In Style!