VOO Vs. VTI: Which ETF Is A Better Investment?

Passive investing in index funds is more popular than ever.

There is a good reason for this. Research shows that passively managed index funds provide higher returns than over 90% of active professional fund managers.

However, there are thousands of funds and hundreds of companies making them. Not all of them are equal.

Of the many companies that provide index funds, Vanguard is one of the biggest and most trusted. Millions of people invest in their funds, and they collectively have over $5 trillion in assets under management.

Two of Vanguard’s exchange-traded funds (ETFs) are particularly popular. Both of them provide exposure to the US stock market:

  • VOO: This ETF tracks the S&P500 index and holds 508 stocks.
  • VTI: This is a more diversified ETF that holds all the S&P500 stocks, but also many mid-cap and small-cap stocks. It holds 3551 stocks in total.

This article examines the differences between VOO and VTI and which one is likely to be a better investment.

VOO: Vanguard S&P 500 ETF

  • Assets: $500.9 billion
  • Holdings: 508 stocks
  • Dividend Yield: 2.03%
  • Expense Ratio: 0.03%

The Vanguard S&P500 ETF (VOO) is one of the biggest index funds that track the S&P500, with $500 billion in assets under management. It also has one of the lowest expense ratios, making it very popular among passive index investors.

Like other S&P500 ETFs, it holds a market-cap weighted index of the 508 stocks in the S&P500. All of these are US-based companies that are categorized as “large-cap,” meaning they have market capitalizations higher than $10 billion.

Even though the S&P500 only represents 500 companies, some of them have two or more classes of stock. This explains why the index has 508 stocks, not 500.

An example of a company with two classes of stock is Alphabet, the parent company of Google that trades as both GOOGL and GOOG.

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Comments

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Ayelet Wolf 4 months ago Member's comment

Has anyone looked into $SPLG? Thoughts?

Kurt Benson 4 months ago Member's comment

I’ll look into both $QQQ and $SPLG but can’t comment on either yet.

Backyard Hiker 4 months ago Member's comment

Does Kris Gunnars have any thoughts?

Andrew Armstrong 4 months ago Member's comment

Hmm, from a up and down perspective both are the same, the only difference is $VTI is index that matches the whole US market, and $VOO is an index that matches only the 500 companies. If you compare them, they look the same. As they go up and down in similar percentage, it dosen't really matter which one you pick. This is my opinion from my humble experience.

Dick Kaplan 4 months ago Member's comment

Nice explanation. I prefer $VTI when combined with $BND and $VXUS. $VOO I always purchase alone.

Wannabe Warren 4 months ago Member's comment

I am going $QQQ better.