VTI vs VOO: Total Stock Market vs S&P 500 - Which Is Better?
Compare VTI (Total Stock Market) vs VOO (S&P 500). Understand the 4,000+ stock difference, small cap exposure, historical performance, and which provides better diversification.
The Great Debate
This is one of the most common questions in index investing: Should I buy VTI (Total Stock Market) or VOO (S&P 500)?
Both are Vanguard funds. Both are incredibly cheap. Both will give you broad U.S. stock exposure. And for the past several decades, they've performed almost identically.
So does it matter? Let's dig in.
Quick Comparison
| Feature | VTI (Total Market) | VOO (S&P 500) |
|---|---|---|
| Index Tracked | CRSP US Total Market | S&P 500 |
| Number of Stocks | ~4,000 | ~500 |
| Market Cap Coverage | ~100% of US market | ~80% of US market |
| Expense Ratio | 0.03% | 0.03% |
| AUM | ~$400 Billion | ~$480 Billion |
| Dividend Yield | ~1.4% | ~1.4% |
| Includes Small Caps | Yes | No |
| Includes Mid Caps | Yes | Limited |
What is the Total Market?
VTI tracks the CRSP US Total Market Index, which includes virtually every publicly traded U.S. company - about 4,000 stocks in total.
This includes:
- Large caps: Apple, Microsoft, Amazon, etc. (same as S&P 500)
- Mid caps: Companies worth $2-10 billion
- Small caps: Companies worth $300M-2B
- Micro caps: Tiny companies worth under $300M
VTI Breakdown by Market Cap
| Category | % of VTI | Approx. # of Stocks | Also in VOO? |
|---|---|---|---|
| Large Cap | ~72% | ~500 | Yes (this IS the S&P 500) |
| Mid Cap | ~18% | ~400 | Partially |
| Small Cap | ~8% | ~1,500 | No |
| Micro Cap | ~2% | ~1,600 | No |
Here's the key insight: About 80% of VTI is the same large-cap stocks that dominate VOO. The "extra" 3,500 stocks only make up about 20% of the total fund value.
Key Differences Explained
Holdings Count: 4,000 vs 500
VTI holds about 8x more stocks than VOO. But this is misleading because of market-cap weighting.
In both funds, the top 10 holdings are identical and make up about 30% of the fund:
| Rank | Company | VTI Weight | VOO Weight |
|---|---|---|---|
| 1 | Apple | 6.2% | 7.0% |
| 2 | Microsoft | 5.8% | 6.5% |
| 3 | NVIDIA | 4.5% | 5.1% |
| 4 | Amazon | 3.4% | 3.8% |
| 5 | Alphabet (GOOGL) | 2.0% | 2.2% |
| 6 | Alphabet (GOOG) | 1.7% | 1.9% |
| 7 | Meta | 1.9% | 2.1% |
| 8 | Berkshire Hathaway | 1.6% | 1.8% |
| 9 | Tesla | 1.4% | 1.6% |
| 10 | UnitedHealth | 1.2% | 1.3% |
The weights are slightly lower in VTI because the small/mid caps dilute the large caps. But functionally, both funds rise and fall with the same mega-cap tech stocks.
Market Cap Coverage
VOO covers about 80% of the total U.S. market by value. VTI covers essentially 100%.
That extra 20% comes from:
- Mid-cap companies not in the S&P 500
- Small-cap companies (like those in the Russell 2000)
- Micro-cap stocks too small for most indexes
Historical Performance
This is where it gets interesting. Despite holding 8x more stocks, VTI and VOO have performed almost identically.
Returns Comparison (Annualized)
| Period | VTI Return | VOO Return | Difference |
|---|---|---|---|
| 1 Year (2025) | 25.1% | 25.3% | -0.2% |
| 3 Years | 9.8% | 10.1% | -0.3% |
| 5 Years | 14.2% | 14.5% | -0.3% |
| 10 Years | 12.4% | 12.6% | -0.2% |
| 15 Years | 13.8% | 14.0% | -0.2% |
VOO has slightly outperformed VTI over most recent periods. Why? Large-cap growth stocks (especially tech) have dominated. The small caps in VTI have been a slight drag on performance.
Year-by-Year Variation
| Year | VTI | VOO | Small Caps Helped? |
|---|---|---|---|
| 2025 | 25.1% | 25.3% | No |
| 2024 | 24.8% | 25.0% | No |
| 2023 | 26.1% | 26.3% | No |
| 2022 | -19.5% | -18.1% | No (hurt) |
| 2021 | 25.7% | 28.7% | No |
| 2020 | 21.0% | 18.4% | Yes! |
| 2016 | 12.7% | 11.8% | Yes! |
Small caps occasionally outperform (like 2020 and 2016), but large caps have dominated the past decade. This is cyclical and will likely change in the future.
The Small Cap Question
The main argument for VTI over VOO is small-cap exposure. But is this actually valuable?
The Case FOR Small Caps
- Historical premium: Small caps have outperformed large caps over very long periods (100+ years)
- Academic research: The "size factor" is one of the Fama-French factors that explain returns
- Diversification: Small caps don't move in perfect lockstep with large caps
- Future winners: Today's mega-caps were yesterday's small caps
The Case AGAINST Small Caps
- Recent underperformance: Small caps have lagged for 10+ years
- Higher volatility: Small caps are more volatile with similar recent returns
- Lower quality: Many small caps are unprofitable or poorly managed
- Less analyst coverage: More potential for fraud and accounting issues
- Tiny allocation anyway: Only 10% of VTI is true small/micro cap
Small Cap Premium: Dead or Just Sleeping?
| Period | Small Cap vs Large Cap (Annual) | Verdict |
|---|---|---|
| 1926-2024 | +1.8% | Small caps won |
| 2000-2024 | +0.5% | Roughly even |
| 2010-2024 | -2.5% | Large caps won |
| 2020-2024 | -4.0% | Large caps dominated |
The small-cap premium has been absent or negative for over a decade. Some argue it's been "arbitraged away" now that everyone knows about it. Others say it's cyclical and will return. Nobody knows for sure.
Diversification Deep Dive
VTI holds more stocks, but does that mean better diversification?
Correlation Between VTI and VOO
The correlation between VTI and VOO is approximately 0.99. That's nearly perfect correlation. For practical purposes, they move together almost identically.
This makes sense when you remember that 80% of VTI is literally the same stocks as VOO.
Sector Allocation Comparison
| Sector | VTI Weight | VOO Weight | Difference |
|---|---|---|---|
| Technology | 30.5% | 31.5% | -1.0% |
| Healthcare | 12.5% | 12.0% | +0.5% |
| Financials | 13.0% | 12.5% | +0.5% |
| Consumer Discretionary | 10.5% | 10.5% | 0% |
| Industrials | 9.0% | 8.5% | +0.5% |
| Communication | 8.5% | 9.0% | -0.5% |
| Other Sectors | 16.0% | 16.0% | 0% |
The sector weights are nearly identical. VTI has slightly less tech and slightly more industrials/financials (sectors with more small caps), but the differences are marginal.
True Diversification
If you want meaningfully different diversification, you need to look beyond VTI vs VOO:
- International stocks: VXUS adds exposure to 8,000+ non-US companies
- Bonds: BND provides truly different risk/return characteristics
- Real estate: VNQ offers sector diversification
- Small-cap value: VBR or AVUV for concentrated small-cap exposure
Which Is Better for You?
Choose VTI If:
- You want to own "the whole market" for philosophical reasons
- You believe small caps will eventually outperform again
- You want one fund to cover all U.S. stocks
- Simplicity appeals to you (one fund = entire market)
- You're building a three-fund portfolio (VTI + VXUS + BND)
Choose VOO If:
- You're fine owning just the 500 largest companies
- You prefer the most liquid, most tracked index
- You want to add small-cap exposure separately (VB, VBR)
- You're skeptical of the small-cap premium
- Your 401(k) offers an S&P 500 fund but not total market
Decision Framework
| Situation | Better Choice | Reason |
|---|---|---|
| Simple one-fund U.S. equity | VTI | Complete market coverage |
| 401(k) with limited options | VOO/S&P 500 fund | Usually the only index offered |
| Want to tilt small-cap | VOO + VB | More control over allocation |
| Matching spouse's 401(k) | Either | Match whatever they have |
| Tax-loss harvesting partner | VTI ↔ ITOT | Can swap without wash sale |
The "Core and Explore" Approach
Some investors use VOO as their core holding and add specific tilts:
- 80% VOO - Core large-cap exposure
- 10% VB or VBR - Small-cap tilt (if you want it)
- 10% VUG or VTV - Growth or value tilt
This gives more control than VTI's fixed allocation. But it also requires more management.
The Bottom Line
Here's the honest truth: it doesn't matter much.
Key Takeaways
- Correlation is 0.99: VTI and VOO move almost identically
- Same expense ratio: 0.03% for both - essentially free
- Similar returns: Historically within 0.2-0.3% of each other annually
- Small caps matter... marginally: Only 10% of VTI is true small/micro cap
- Neither is wrong: Both are excellent choices for U.S. equity exposure
My Personal Take
I use VTI in my taxable accounts because:
- I like owning "everything" for psychological comfort
- It's one fewer decision to make
- Small caps might outperform eventually (or might not)
But my 401(k) only offers an S&P 500 fund, and I don't lose sleep over it. The difference is tiny.
What Actually Matters
Instead of agonizing over VTI vs VOO, focus on things that matter more:
- Savings rate: How much are you investing?
- Asset allocation: How much in stocks vs bonds?
- International diversification: Do you own non-US stocks?
- Time in market: Are you staying invested through volatility?
- Avoiding mistakes: Not panic selling in crashes
The difference between VTI and VOO is a rounding error compared to these factors.
The 50-Year Test
Imagine it's 2075 and you're looking back at your investing career. Will you care whether you picked VTI or VOO?
No. You'll care that you invested consistently, stayed the course during bear markets, and let compounding work. The VTI vs VOO debate will seem absurdly trivial.
So pick one, buy it, and move on with your life. Either choice is excellent.
This is not investment advice. Past performance does not guarantee future results. Consider your personal situation before investing.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instruments. All investment decisions must be made at your own responsibility. Forex and cryptocurrency trading carries risk of capital loss.