Index Funds Go Head to Head


If you happen to’re balancing VTI vs. VOO, you’re most likely placing cash into an index fund. That’s usually going to be choice. Index funds assist you to diversify your portfolio even in case you don’t have a lot to take a position, and even funding professionals typically fail to choose shares that beat the index efficiency.

However which of those funds must you select? Let’s begin with the fundamentals.

VTI vs VOO: By the Numbers

VTI vs VOO - By the NumbersVTI vs VOO - By the Numbers
VTI VOO
Full Identify Vanguard Complete Inventory Market ETF Vanguard S&P 500 ETF
Index Tracked CRSP U.S. Complete Market Index S&P 500 Index
Property Underneath Administration* $318.6 billion $339.7 billion
Variety of Holdings 3839 507
Expense Ratio 0.03% 0.03%
Dividend Yield* 1.54% 1.56%
Issuer Vanguard  Vanguard 

* As of Sept. 2023

5-12 months Efficiency

VOO - VTI Five year performance chartVOO - VTI Five year performance chart

Supply: Barchat

VTI vs VOO: What’s the Distinction?

An important distinction between VTI and VOO is that every fund tracks a distinct index:

  • VTI tracks the CRSP U.S. Complete Market index. The CRSP U.S. Complete Market index is an index of virtually 4000 firms headquartered within the US, from mega to micro capitalization. This makes the index illustration of your entire US inventory market, not simply the most important firms.
  • VOO tracks the S&P 500. The S&P 500 is an index of the five hundred high largest firms within the US.

These indices and the ETFs that observe them are market cap weighted. That implies that they provide bigger firms a heavier weight.

📈 Study extra: Unlock the fundamentals of constructing wealth with our step-by-step investing information for inexperienced persons.

VTI vs VOO: Sector Publicity

VTI and VOO use barely totally different phrases to interrupt down their sector publicity.

VTI Sector Breakdown

Sector Weight
Data Know-how 30.20%
Client Discretionary 14.40%
Industrials 13.00%
Well being Care 12.60%
Financials 10.30%
Client Staples 5.10%
Power 4.60%
Actual Property 2.90%
Utilities 2.70%
Telecommunication 2.20%
Primary Supplies 2.00%

VOO Sector Breakdown

Sector Weight
Know-how 28.20%
Well being Care 13.20%
Financials 12.40%
Client Discretionary 10.60%
Communication Providers 8.80%
Industrials 8.40%
Client Staples 6.60%
Power 4.40%
Actual Property 2.50%
Primary Supplies 2.50%
Utilities 2.40%

One factor that instantly stands out in these breakdowns is that each VTI and VOO are closely weighted towards IT (tech & communication) particularly VOO, reflecting the present massive market capitalization of those sectors within the US inventory market.

  • VTI tracks a bigger variety of firms from a wider vary of company sizes. It’s weighted extra closely towards the patron and industrial sectors, which include extra medium and small-size firms. The bigger variety of holdings and better variation within the firms’ profiles make it extra diversified.
  • VOO tracks a smaller variety of firms with a barely higher focus in tech. It provides a better half to healthcare and financials, which are typically dominated by massive firms (generally known as Massive Banks and Massive Pharma).

Neither of those choices is essentially higher or worse. They supply publicity to barely totally different sectors of the market, and that may result in totally different efficiency traits.

VTI vs VOO: The Similarities

VTI and VOO have quite a bit in frequent. They’re each extraordinarily massive ETFs. Each funds are managed by Vanguard, which has a fame for offering low-cost funds.

If you happen to’re searching for massive, extremely liquid funds with credible administration, each of those ETFs will cross your display screen.

There are additionally much less apparent similarities, explaining the very related efficiency charts stemming from three primary information.

  • As market cap-weighted indexes, they each give a predominant area to mega-caps price trillions of {dollars}, most of them tech firms.
  • Lots of the efficiency of the CRSP U.S. Complete Market Index is pushed by the highest largest holdings, that are all a part of the S&P 500.
  • The inventory market worth of mid and small-cap shares tends to maneuver in unison with larger-cap shares.

What does that imply in follow? Let’s have a look at the ten largest holdings of VTI and VOO.

Prime Holdings: VTI vs VOO

The highest holdings of each indexes are an identical for the primary ninth largest holdings, solely in a barely totally different order. It contains:

  • Apple Inc.
  • Microsoft Corp.
  • Amazon.com Inc.
  • NVIDIA Corp.
  • Alphabet Inc. Class A
  • Alphabet Inc. Class C
  • Tesla
  • Fb Inc. Class A
  • Berkshire Hathaway Inc. Class B

So the one distinction among the many high 10 holdings is that VTI comprises insurance coverage and healthcare inventory UnitedHealth Group whereas VOO comprises oil & fuel Exxon Mobil Corp.

The identical might be true even when trying on the subsequent 10 holdings for every fund. The record is an identical for ninth of them, with a really related order:

  • Exxon Mobil Corp or UnitedHealth Group
  • Eli Lilly & Co.
  • JPMorgan Chase & Co.
  • Visa Inc. Class A
  • Johnson & Johnson
  • Broadcom Inc.
  • Procter & Gamble Co.
  • MasterCard Inc Class A
  • Residence Depot

The distinction is within the twentieth largest holdings: pharmaceutical firm Merck & Co Inc. for VTI and vitality firm Chevron Corp. for VOO.

The one actual distinction is for the highest holdings of VTI to be barely much less of the entire ETF, making area for the smaller holdings of smaller firms.

Which Is Finest for You?

Each VTI and VOO are good decisions for an investor who’s searching for a top quality diversified index fund. Each are among the many largest and most outstanding ETFs within the nation, each are extremely liquid, and so they have very related observe data. Additionally they have the identical low charge of 0.03%.

Your alternative will probably be based mostly on what you’re searching for in an funding.

  • VTI is giving some publicity to firms with a smaller market capitalization. This offers a barely totally different profile when trying on the sector foundation, giving extra significance to the economic and client sectors.
  • VOO is a extra aggressive, much less diversified fund centered on main tech firms. This offers it higher potential for positive factors in bull market durations but in addition opens up the opportunity of vital losses in a bear market.

The way you see the markets makes a distinction: in case you assume markets are going to maintain favoring massive caps, then you’ll favor an index centered solely on them. If you happen to consider that smaller firms may have the ability to outperform, you’ll favor an index in a position to rebalance towards them and enhance their weight into the index whereas their market capitalization grows.

If you’re weighing VTI vs VOO and also you’re having bother making up your thoughts, contemplate allocating a portion of your portfolio to every fund. Maintaining a number of ETFs in your portfolio can present the perfect of each worlds.

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