We are going to explore the difference between VT vs VTI.
Vanguard Total World Stock ETF (VT) vs Vanguard Total Stock Market ETF (VTI).
There is no shortage of options for investing in Exchange Traded Funds (ETFs).
Choosing between two funds can be difficult, but I will make it easy for you to decide VT vs VTI.
VT vs VTI
The primary difference between VT and VTI is the asset allocation of the exchange-traded fund (ETF). VT has about 40% of its holdings in international stocks. VTI is comprised of almost 100% U.S based companies.
Another significant difference is the number of stocks in each, with VTI having 3,535 different companies in the index compared to 9,299 with VT.
VT has an expense ratio of 0.07%
VTI has an expense ratio of 0.03%
This means VT is more than twice as expensive compared to VTI. That can make a significant difference over the long term.
- Tracks the performance of the CRSP US Total Market Index
- It has an expense ratio of 0.03%
- No minimum initial investment
- Holds 3,535 stocks
- Tracks the performance of the FTSE Global All-Cap Index
- It has an expense ratio of 0.07%
- No minimum initial investment
- Holds 9,299 stocks
VT vs VTI Performance
Vanguard's VT and VTI have performed similarly over the last 10 years, beating VT by around 4% annually. That is a significant difference, especially considering compound interest on those returns.
Here is how VT and VTI performance compares:
This is a performance chart of VT vs VTI:
As you can see, VTI has outperformed VT have similar performances with VTI slightly outperforming.
Similarities between VT and VTI:
- Exchange-Traded Funds (ETFs)
- Low Expense Ratios
- Well Diversified
VT and VTI Differences
The main difference between VT and VTI is that VTI holds almost all U.S.-based companies, while VT holds a collection of stocks from companies worldwide, including the United States.
VTI also has fewer holdings in the index compared to VT.
By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.
Differences between VT and VTI:
- Different Number Of Holdings (9,299 vs. 3,535)
- Expense Ratio (0.07% vs. 0.03%)
- Level Of Diversification
VT vs VTI Holdings
Vanguard's VTI has fewer holdings than VT (3,535 vs. 9,299). However, VT and VTI have almost the same top 10 holdings.
VT's top 10 holdings comprise 14% of its total, compared to 24% with VTI.
This makes VT more diversified compared to VTI.
VTI's performance will also have more volatility depending on the performance of these top 10 holdings.
Here are VT and VTI's top 10 holdings side by side:
VT and VTI are primarily Apple, Microsoft, Amazon, Google, and Tesla.
VTI and VT Holdings Overlap
There is an overlap between VTI and VT that includes 1,737 stocks. Roughly 46% of VTI's holdings are included in VT, and 20% of VT's holdings are in VTI.
Here are VTI and VT holdings overlap:
There is an overlap by weight of about 58%:
This gives VT more diversification compared to VTI.
- Fund Inception: 2001
- Expense Ratio: 0.03%
- Number Of Stocks: 3,535
- Top 10 Holdings: 23.9%
Vanguard Total Stock Market ETF (VTI) represents close to 100% of the U.S. equity market that is publicly traded. It also tracks the CRSP U.S. Total Market Index.
Vanguard's VTI has an expense ratio of 0.03%.
This notably implies that the fund has limited exposure to several international stocks.
However, this does not affect the companies represented in the fund. These stocks have a significant international presence.
Take a look at the historical chart below. You can see that the returns for VTI and the S&P 500 have been nearly identical over the last 10 years.
However, remember that this does not guarantee that the next 10 years will look the same.
Here are the top 10 holdings for the Vanguard Total Stock Market ETF (VTI):
The fund has $1.3 trillion in total net assets.
VTI comprises Apple, Microsoft, Google, Amazon, and Berkshire and provides exposure to over 3,000 stocks.
As we will see next, the top 10 holdings of VTI make up 21% of the ETF, which is more than VT.
No Minimum Investment
VT and VTI are exchange-traded funds (ETFs), so there is no minimum investment. Investors looking to buy fractional shares can use platforms like M1 Finance. ***(Get $100 When You Use This Link)***
Usually, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.
Buying fractional shares allows you to maximize your investment. You no longer have to keep your money idle until you have enough to purchase a total share.
This is especially beneficial regarding VTI shares due to their high prices per share (~$238/Share).
I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.
Personal Capital's free tools allow you to quickly find which of your investments has high fees so you can switch them to low-cost options. (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)
- Fund Inception: 2008
- Expense Ratio: 0.07%
- Number Of Stocks: 9299
- Top 10 Holdings: 14%
The Vanguard Total World Stock ETF (VT) exposes investors to developed and emerging equity markets. The ETF comprises companies in North America, emerging markets, and Europe.
VT was created in 2008 and has an expense ratio of 0.07%, making it a low-cost ETF. However, it is not as low as VTI (0.03% expense ratio).
However, the cost of owning VT over VTI won't make a significant difference to an investor since they are both low-cost ETFs. More important is achieving the asset allocation you desire as an investor (international vs. domestic).
VT also has an equivalent Vanguard Admiral Fund, Vanguard Total World Stock Index Fund Admiral Shares (VTWAX).
Moving on, here are the top 10 holdings for VT:
VT primarily comprises Apple, Microsoft, Google, Amazon, and U.S. dollars.
Over the last 10 years, VT has underperformed compared to the S&P 500, with an average return of 12% per year compared to 16.5% from the S&P 500.
VT has about $32 billion in net assets. It has underperformed over the last 10 years, but again there is no guarantee the next 10 years will look the same.
Which is Better VT or VTI?
VT and VTI are different investments. VT offers more diversification since it holds about three times as many stocks. However, this has decreased performance over the last 10 years.
Even so, I would say both are excellent options for long-term investors.
If having an asset allocation that includes international stocks at the lowest fees helps you sleep at night, VT would be a great option.
If you are looking for only U.S based companies to invest in, then VTI allows you to easily invest in all of them at a very low cost.
I think both VT and VTI can be in a long-term investment portfolio.
Lastly, it's important to consider costs and fees because they can add up in the long run. That's why purchasing and selling your shares commission-free is essential.
You can purchase fractional shares for free with M1 Finance, allowing you to buy VTI, VT, and thousands of other stocks/ETFs.
Is VT or VTI Better for Financial Independence?
VTI and VT can get you to Financial Independence Retire Early (FIRE). They both have performed excellently and have low expense ratios.
Being part of the FIRE community, we aim for the lowest fees possible and are big fans of Vanguard.
My Winner: VTI
If I have to choose one winner, it's VTI for its diversification, lower expense ratio, and because of books like The Simple Path To Wealth.
However, as I mentioned, you can invest in both depending on your desired asset allocation.
Lastly, both ETFs are Vanguard funds which likely means they will continue to offer low-cost ETFs.