The Vanguard S&P 500 Index ETF (VOO) and the Vanguard Total Stock Market ETF (VTI) are two of the largest ETFs and both are sponsored by Vanguard. VOO and VTI are a core holding of many investor portfolios and many investors compare VOO vs VTI in order to decide which should be the foundation of their portfolio.
The Short Answer
The biggest difference between VOO and VTI is that VOO is a large- and mid-cap ETF, while VTI is a “total market fund” which includes more mid-caps and small-caps. Despite these differences, the risk and return between these two funds is nearly identical and I consider them interchangeable.
A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.
The Long Answer
Historical Performance: VTI vs VOO
VTI was launched on May 24, 2001, while VOO was launched on September 7, 2010. Since then, VOO has outperformed by .24% annually. This has been primarily driven by large-caps’ relative outperformance during this time period, although that dynamic could reverse in the future. That being said, the performance between these two funds is extremely close and shows that modest differences in market cap exposure does not impact total returns that much. The cumulative performance differential over the past 12 years is only about 12%.
Differences between VTI vs VOO
The biggest difference between VOO and VTI is the market cap exposure of the funds. VOO tracks the S&P 500 index which includes mostly large-caps and some mid-caps. VTI tracks the CRSP US Total Market Index which covers much more of the market by including more mid-caps and small-caps.
Both VOO and VTI hold essentially 100% stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.
Market Cap Exposure
VOO tracks the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. VTI tracks the broader CRSP US Total Market Index and so it owns many more mid-caps and small-caps. In other words, VOO is a large-cap vehicle and VTI is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.
The sector weights between VOO and VTI are nearly identical.
The expense ratio for both funds is .03%, which extremely low.
ETFs are free to trade at many brokers and custodians, so both VOO and VTI should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VOO and VTI is about .01%, so individual investor trades will not generally be large enough to “move” the market.
Tax Efficiency & Capital Gain Distributions
ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, neither VTI nor VOO has ever made a capital gains distribution (nor do I expect them to). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.
Final Thoughts: VTI vs VOO
Both VOO and VTI are large, core funds sponsored and managed by Vanguard, one of the largest investment sponsors in the world. Although VOO is more of a large-cap ETF and VTI is a total market ETF, performance has been extremely similar.
I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better” (unless one has a clear view on whether larger caps or smaller caps will perform better in the future and even then the difference won’t be much)! In my opinion, both funds are among the best ETFs out there and investors cannot really go wrong with either.