VTI is one of the largest ETFs and is a core holding of many portfolios, while VTV 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 VTI 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. Please read on for a comparison of VTV vs VTI.
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 only owns large-cap stocks that are classified as value stocks. VTI owns a more diverse portfolio of all market caps and investment styles. Historical performance has been similar, but will depend on how the value factor performs moving forward.
The Long Answer
Historical Performance: VTV vs VTI
Since their common inception in 2004, performance has been relatively similar with an annualized difference of roughly 1%. This has compounded over time though and the cumulative performance differential is about 115%!
As the VTV vs VTI chart shows, the value factor has really underperformed the broader market since their common inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether growth or value will perform better in the future.
Differences Between VTV and VTI
The primary difference between these two funds is that VTV tracks the CRSP US Large Cap Value Index, while VTI tracks the broader CRSP US Total Market Index.
Geographic Exposure
Both VTV and VTI 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 VTI are relatively similar.
| VTV | VTI | |
| Large Cap | 76% | 72% |
| Mid Cap | 24% | 20% |
| Small Cap | 0% | 9% |
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 | VTI | |
| Basic Materials | 2.81% | 2.56% |
| Consumer Cyclical | 2.52% | 10.39% |
| Financial Services | 19.54% | 12.79% |
| Real Estate | 3.11% | 3.29% |
| Communication Services | 4.94% | 7.61% |
| Energy | 7.96% | 5.06% |
| Industrials | 12.60% | 8.76% |
| Technology | 8.69% | 23.76% |
| Consumer Defensive | 11.91% | 7.13% |
| Health Care | 20.06% | 14.75% |
| Utilities | 5.87% | 2.94% |
Expenses
VTV’s expense ratio is .04%, while VTI’s expense ratio is .03%. Yes, VTV is .33% more expensive than VTI, 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 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 VTV and VTI 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 VTI 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 VTI
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 VTI 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.
Curious readers who want to read about VTV’s growth-oriented counterpart can read my comparison of VUG vs VTI here.
