The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs and is a core holding of many portfolios, while the Vanguard Value ETF is a popular “factor” ETF. In this context, factors are quantitative characteristics that index providers assign to stocks. In this case, VTV targets value stocks (as they are defined by the index provider). Even though VOO and VTV play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a factor or to benchmark a factor’s performance.
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 Short Answer
VTV essentially owns the subset of VOO’s holdings that are considered value stocks. VOO owns a more diverse portfolio including growth stocks. Historical performance has been similar, but will depend on how the value factor performs moving forward.
The Long Answer
Historical Performance: VTV vs VOO
VTV was launched in 2004, while VOO was launched in September 2010. Since then, performance has been relatively similar with an annualized difference of only .80%. This has compounded over time though and the cumulative performance differential is about 37%.
As the VTV vs VOO chart shows, the value factor has really lagged the broader market since VOO’s inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether value or growth will perform better in the future.
Differences Between VTV and VOO
The primary difference between these two funds is that VTV tracks a value-oriented index, while VOO tracks a broader index.
Geographic Exposure
Both VTV and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.
Market Cap Exposure
Overall, the market cap exposures of VTV and VOO are relatively similar.
| VTV | VOO | |
| Large Cap | 79% | 85% |
| Mid Cap | 21% | 16% |
| Small Cap | 0% | 0% |
Sector Weights
There are some significant differences in sector weights, which makes sense based on the fact that VTV is targeting the value factor and some sectors meet the value factor criteria more easily.
| VTV | VOO | |
| Basic Materials | 2.92% | 2.52% |
| Consumer Cyclical | 2.51% | 10.38% |
| Financial Services | 20.63% | 13.99% |
| Real Estate | 3.22% | 2.88% |
| Communication Services | 4.44% | 7.83% |
| Energy | 8.18% | 5.06% |
| Industrials | 12.51% | 8.76% |
| Technology | 8.48% | 23.76% |
| Consumer Defensive | 10.93% | 7.13% |
| Health Care | 20.58% | 14.75% |
| Utilities | 5.61% | 2.94% |
Expenses
VTV’s expense ratio is .04%, while VOO’s expense ratio is .03%. Yes, VTV is 25% more expensive than VOO, but we’re talking about 1 basis point! This in an non-issue in my opinion.
Transaction Costs
ETFs are free to trade at many brokers and custodians, so both VTV and VOO 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 VTV and VOO is very low, 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). Neither VTV nor VOO has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.
Final Thoughts: VTV vs VOO
Both funds are great ETFs that do what they are designed to do. Generally speaking, I do not think factor ETFs should be the core of a portfolio. For a core position, I would personally choose VOO every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using VTV. At the end of the day, these two funds are not necessarily comparable because they play very different roles in a portfolio.
