VOO vs. VTI — ETF Comparison - Stock Analysis (2024)

FAQs

VOO vs. VTI — ETF Comparison - Stock Analysis? ›

VTI is a total U.S. market fund and holds more than 3,500 stocks. VTI is better diversified and benefits from small and mid-cap stocks that grow into large caps. VOO is less diversified, tracking the performance of the S&P 500 Index. VOO excludes small and mid-cap stocks.

Smaller company stocks can be considered riskier than large company stocks and may or may not perform better. You can see this in the difference between year-to-date returns of the funds. VTI is underperforming VOO & SPY by about 0.5% this year. In other years, VTI will outperform.

VOO tracks the S&P 500 Index, while VTI tracks the CRSP US Total Market Index. This makes them sufficiently differentiated in the eyes of the IRS, even though VTI has a 0.99 correlation to VOO.

The table below shows the total annual returns between VTI and SPY. The table above shows that SPY outperformed VTI in 8 out of 10 years from 2014 to 2023. On average, SPY outperformed VTI by an average of 1.01%. VTI only outperformed in 2 years, from 2014 to 2023, by an average of 1.75%.

While the two ETFs follow the same strategy, they earn different ratings. VOO earns a top rating of Gold, while SPY earns the next best rating of Silver. Almahasneh says the reason is fees. VOO charges 0.03%, while SPY charges 0.09%.

Pros and cons of Investing in VTI and VOO

Broad market exposure and diversification: Both VTI and VOO provide exposure to a wide range of companies across various sectors. VTI offers more comprehensive market coverage, including small and mid-cap stocks, while VOO focuses on the large-cap stocks of the S&P 500.

In the past year, VOO returned a total of 28.51%, which is slightly higher than VTI's 27.98% return. Over the past 10 years, VOO has had annualized average returns of 12.90% , compared to 12.31% for VTI. These numbers are adjusted for stock splits and include dividends.

Q: How does the wash sale rule work? If you sell a security at a loss and buy the same or a substantially identical security within 30 calendar days before or after the sale, you won't be able to take a loss for that security on your current-year tax return.

VTI and VOO offer almost the same dividend yields—1.42% and 1.45% respectively as of July 31, 2023. Expressed as a percentage, dividend yield tells an investor how much they will earn in dividends each year for every $1 they invest in an ETF.

Vanguard S&P 500 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.

Should I have both VOO and VTI? ›

Or, you could also invest in both, for example, by putting half in VOO and half in VTI. Here's a summary of which one to choose: If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI.

You can't go wrong with either the Vanguard Total Stock Market ETF or the Vanguard S&P 500 ETF. Both offer very low expense ratios and turnover rates, and the difference in their tracking errors is negligible. The overlap in their holdings ensures that you'll get very similar returns going forward.

The Vanguard Total Stock Market Fund (VTI 0.14%) is, like VOO, an index ETF that's popular because of the diversification it provides at an unbeatable price.

Warren Buffett has long recommended the S&P 500 index fund and ETF, and through his holding company Berkshire Hathaway, he also owns two of these types of investments: the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).

The report suggests that Buffett's company did not buy many stocks last quarter, adding no new names and increasing its stake in only three companies. However, Berkshire does have two ETFs listed on the 13F. The SPDR S&P 500 ETF Trust, ticker SPY, and the Vanguard S&P 500 ETF, ticker VOO.

Investing in VOO comes with risks, such as missed opportunities for higher returns and potential periods of decline. VOO is preferred over other index funds due to its low expense ratio and higher dividend yield, making it more aligned with shareholders' interests.

Vanguard High Dividend Yield ETF (VYM)

The better Vanguard ETF for their needs is likely VYM, which delivers a higher 2.9% 30-day SEC yield by targeting the FTSE High Dividend Yield Index. It also charges the same expense ratio as VIG does, at 0.06%.

Vanguard High-Yield Corporate Fund (VWEAX)

The Vanguard High-Yield Corporate Fund is the company's top performing bond fund over the past decade. It features a high-yield, intermediate-term fixed income portfolio.