We are going to explore the difference between VTV vs VTI:
Vanguard Value ETF (VTV) vs Vanguard Total Stock Market ETF (VTI)
When it comes to investing, there is no shortage of fund options.
Choosing between two funds can be difficult, but I will make it easy to decide between VTV vs VTI.
VTV vs VTI
The primary difference between VTV and VTI is that VTI tracks the CRSP U.S. Total Market Index, while VTV tracks the CRSP U.S. Large Cap Value Index.
Another significant difference is the number of stocks in each ETF. For example, VTI has 4,091 companies in the index compared to 352 with VTV.
VTV and VTI have different expense ratios.
VTV has an expense ratio of 0.04%
VTI has an expense ratio of 0.03%
This expense ratio means VTV is more expensive than VTI. Although, the difference is only 0.01% which can be considered insignificant to some investors.
- Tracks the CRSP U.S Large Cap Value Index
- Expense Ratio 0.04%
- No Minimum Investment
- Holds 352 Stocks
- Dividend Yield 2.32%
- Tracks the CRSP U.S Total Market Index
- Expense Ratio 0.03%
- Holds 4,091 Stocks
- Equivalent Admiral Fund (VTSAX)
- Dividend Yield 1.39%
VTV vs VTI Performance
VTV and VTI have had similar performance returns over the last 10 years, with VTI beating VTV by 0.75% annually. This difference can be significant, especially when considering compound interest on those returns.
Here is how VTV and VTI performance compares:
This is a performance chart comparing VTV and VTI:
As you can see, VTV and VTI have performed similarly over the long term but drastically different over the last year. However, VTI is still beating VTV in performance over the last 10 years.
This doesn't necessarily mean this trend will continue.
Similarities between VTV and VTI:
- Vanguard Funds
- Exchange-Traded Funds (ETFs)
- Low Expense Ratios
- Well Diversified
VTV and VTI Differences
The main difference between VTV and VTI is that VTI tracks the CRSP US Total Market Index, while VTV tracks the CRSP US Large Cap Value Index. In addition, VTI holds 4,091 U.S. companies, while VTV holds 352 large-cap value companies in the U.S.
VTV is a Large Cap Value ETF
VTI is a Large Blend ETF
Therefore, VTI has more holdings than VTV because VTV focuses on the value companies in VTI.
By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.
Differences between VTV and VTI:
- Asset Allocation (Large-Cap Value Only vs Value and Growth)
- Different Number Of Holdings (352 vs 4,091)
- Expense Ratio (0.04% vs 0.03%)
- Level Of Diversification
VTV vs VTI Holdings
Vanguard's VTI has more holdings than VTV (4,091 vs 352). VTV and VTI also have different top 10 holdings.
The difference is that VTV's top 10 holdings comprise value companies and exclude growth companies like Apple, Amazon, and Tesla. VTV's top 10 holdings comprise 21% of its total holdings compared to 22% with VTI.
This difference makes VTV less diversified than VTI because investors are excluded from growth companies that have dominated over the last 10 years.
VTI will also have more volatility depending on the performance of these 10 holdings.
Here is VTV and VTI's top 10 holdings side by side:
VTV and VTI's top 10 holdings overlap with Berkshire Hathway and UnitedHealth.
VTI and VTV Holdings Overlap
There is an overlap between VTI and VTV that includes 347 stocks. Roughly 9% of VTI's holdings are in VTV, and 99% of VTV's holdings are in VTI.
Here are VTI and VTV holdings overlap:
There is an overlap by weight of about 44%:
VTI has more diversification compared to VTV.
- Fund Inception: 2004
- Expense Ratio: 0.04%
- Number Of Stocks: 352
- Top 10 Holdings: 21%
The Vanguard Value ETF (VTV) tracks the CRSP U.S Large Cap Value Index. The index selects stocks from the top 85% market capitalization based on multiple value factors.
Vanguard Value ETF has an MSCI ESG Fund Rating of AA based on a score of 7.40 out of 10.
The ETF holds companies in North America.
VTV launched in 2004 and currently has an expense ratio of 0.04%. This expense ratio makes it a low-cost ETF, but not as low as VTI (0.03% expense ratio).
The cost of owning VTV over VTI won't make a significant difference since they are both low-cost ETFs.
More important is being able to achieve the asset allocation you desire.
VTV's equal Admiral Fund is the Vanguard Value Index Fund Admiral Shares (VVIAX).
Vanguard's VTV aims to track the CRSP US Large Cap Value Index, covering domestic large-cap value equities. VTV has the potential to provide steady returns but comes with less diversification than other broad markets ETFs.
Here is VTV's performance chart:
As you can see, VTV has had strong growth over the last 10 years.
However, in the previous 10 years, VTV has underperformed compared to the S&P 500, with an average return of 12% per year.
Moving on, here are the top 10 holdings for VTV:
VTV comprises Berkshire Hathaway, UnitedHealth, Johnson & Johnson, JP Morgan, and Proctor & Gamble.
VTV has about $151 billion in net assets.
No Minimum Investment
VTI and VTV are exchange-traded funds (ETFs), so there is no minimum investment. Investors looking to buy fractional shares can use platforms like M1 Finance.
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. This is great for shares of VTI due to its high price per share.
There are two easy ways to invest in VTI or VTV commission-free.
Both of these options are free. This is important because fees can lower our returns.
M1 Finance is the best option because it allows you to purchase VTI, VTV, and thousands of other stocks.
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: 2000
- Tracks the CRSP US Total Market Index
- Expense Ratio: 0.03%
- Vanguard ETF
- No Minimum Investment
- Number Of Stocks: 3,535
- Admiral Shares (VTSAX)
Vanguard Total Stock Market ETF (VTI) represents nearly 100% of the U.S. equity market. It also tracks the CRSP U.S. Total Market Index.
Vanguard's VTI has an expense ratio of 0.03%.
This implies that the fund has limited exposure to several international stocks.
Yet, this does not affect the companies represented in the fund. Moreover, these stocks have a significant international presence.
Vanguard Total Stock Market ETF (VTI) is famous for many reasons, of which consistent returns are a significant part.
Its risk level is similar to that of the S&P 500.
Vanguard's VTI comprises Apple, Microsoft, Google, Amazon, and Tesla and provides exposure to over 3,500 stocks.
Here are the top 10 holdings for VTI:
Major sectors in the index include:
- Consumer Services
The top 10 holdings make up 25% of its total net assets.
Which Is Better VTV or VTI?
Both VTV and VTI are great long-term investments. VTI offers a similar asset allocation and increased diversification at a lower cost of only 0.03%.
As we saw earlier, VTV underperformed VTI by 0.75% annually. If those returns continue for the next 10 years, it would make the higher cost of VTV not worth it.
However, we can't be sure VTV will continue underperforming VTI since past performance does not predict future returns.
That said, since we don't know if value or growth will perform better, it might be best to blend both like VTI.
This way, your portfolio grows regardless of the next trend in the market.
For those reasons, I would say VTI is the better option.
It gives you similar returns at a guaranteed lower cost.
It comes down to VTI being more diversified compared to VTV.
A similar fund to VTV is the Vanguard S&P 500 Value ETF (VOOV). VOOV has a similar profile and returns but a higher expense ratio (0.10%).
Lastly, I think both VTV and VTI can have a place in a long-term investment portfolio.
Considering costs and fees is essential 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, VTV, and thousands of other stocks/ETFs.
Index Funds vs Exchange Traded Funds (ETFs)
Exchange-traded funds (ETFs) are usually a more accessible option for new investors since they don't have a minimum investment.
In comparison, if you can afford to invest more than the minimum, it's usually better to choose Vanguard admiral index funds because they typically have a lower expense ratio.
In this case, the expense ratio is the same or better with the ETF version of VTV and VTI.
Their matching admiral funds are:
VTV = Vanguard Value Index Fund Admiral Shares (VVIAX)
VTI = Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
ETFs are also available to trade at anytime the market is open. Index funds trade after the market closes and the price settles.
Depending on your views, this can be a good or bad thing.
For long-term investors, the ability to trade anytime in the day is not a benefit. On the contrary, it can encourage bad habits like market timing and frequent trading.
An index fund might be a better option if you have these tendencies.
If you prefer to have every penny invested, you will like that index funds offer fractional share buying on the Vanguard platform.
On the contrary, ETFs must be bought one total share at a time unless you use a platform like M1 Finance.
That can sometimes lead to money left uninvested while waiting for your next contribution.
This is more of a preference since I don't think it will significantly affect your returns.
Is VTV a Good ETF?
VTV is a good ETF in tax-advantaged accounts to minimize tax on dividends. This is because of its larger dividend yield of 2.32%.
Investments with high dividend yields in taxable accounts can create a tax drag on your portfolio.
This can lower your total returns over your investing lifetime.
Generally, it is better to put the following:
High Dividend ETFs Like VTV In Retirement Accounts (Tax Sheltered Accounts)
Low Dividend ETFs In Taxable Accounts
Doing this can help you pay fewer taxes over time.
Is VTV or VTI Better for Financial Independence?
VTV and VTI can get you to Financial Independence Retire Early (FIRE). They both have a similar return on investment and have rock-bottom expense ratios.
Calculate Your FI Number With My Free FIRE Calculator
So, either option is an excellent investment for financial independence.
My Winner: VTI
My winner is VTI, based on it having a more diversified portfolio with 4,091 holdings and a lower expense ratio of 0.03%.
Whether you choose VTI or VTV, the critical part is investing regularly in low-cost funds over the long term. That is the formula for wealth!
As I mentioned, you can invest in both depending on your desired asset allocation.
Both ETFs are Vanguard funds which likely means they will continue to offer low-cost ETFs.
If you like ETF comparisons like these, check out more in our related posts below.