Better Total Stock Market ETF: Vanguard's VTI vs. Schwab's SCHB

The Vanguard Morningstar Total Stock Market ETF (NYSEMKT:VTI) and Schwab U.S. Broad Market ETF (NYSEMKT:SCHB) offer investors nearly identical, low-cost access to the entire U.S. equity market with minimal performance divergence.

Investors seeking a "set it and forget it" foundation for their long-term portfolios often turn to total market funds to capture the full breadth of the American economy. These ETFs aim to replicate the performance of the entire U.S. equity landscape, from massive technology giants to thousands of smaller enterprises.

By covering nearly every publicly traded company, these funds provide exposure to both growth and value styles, ensuring investors do not have to choose between market segments.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Both ETFs are exceptionally affordable, each carrying a 0.03% expense ratio. For a long-term investor, a difference of zero basis points means both funds are essentially equal in their ability to minimize the drag of management fees on total returns. Their dividend yields are also aligned at 1%.

Performance & risk comparison

What's inside

The Vanguard Morningstar Total Stock Market ETF follows a passive strategy to track the CRSP US Total Market Index, utilizing an index-sampling technique to manage its 3,598 holdings. This approach captures a massive range of companies across all market caps. Its largest positions include Nvidia (NASDAQ:NVDA) at 6.40%, Apple (NASDAQ:AAPL) at 6.29%, and Microsoft (NASDAQ:MSFT) at 4.79%. The portfolio is dominated by the technology sector at 36%, followed by financial services at 12% and industrials at 10%. It was launched in 2001. The Vanguard fund has paid $3.90 per share over the trailing 12 months, which on its recent ~$376.58 share price works out to a 1% yield.

The Schwab U.S. Broad Market ETF replicates the Dow Jones U.S. Broad Stock Market Index, holding 2,383 stocks to represent the overall performance of the market. While its holding count is lower than the Vanguard fund, it still provides significant diversification for a core portfolio. Its top holdings include Nvidia at 7.07%, Apple at 6.24%, and Microsoft at 4.83%. Sector exposure is nearly identical, led by technology at 36%, financial services at 12%, and healthcare at 10%. It was launched in 2009. The Schwab fund has paid $0.30 per share over the trailing 12 months, which on its recent ~$29.47 share price works out to a 1% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

An exchange-traded fund is one of the best ways to invest in the entire U.S. stock market. The Vanguard Morningstar Total Stock Market ETF (VTI) and Schwab U.S. Broad Market ETF (SCHB) provide this, and given how similar they are in their characteristics and performance, choosing which to invest in comes down to a few considerations.

SCHB offers retail investors a far lower price per share, and that alone can be a deciding factor. The fund performed a 3-for-1 share split in 2024, contributing to its reduced price. Also, given the similarities with VTI, SCHB is a natural choice for Schwab customers. However, this ETF has fewer holdings, so it does not provide as much exposure to small-cap stocks as Vanguard's alternative.

VTI sports a massive AUM exceeding $2 trillion, far bigger than SCHB. This gives the fund tighter bid-ask spreads for frequent traders, although both ETFs provide plenty of liquidity.

In addition, VTI holds over one thousand more stocks than SCHB. This broader diversification means investors get deeper small- and micro-cap exposure. That said, the ETF is market cap weighted, so the larger companies will dominate the fund's performance.

Robert Izquierdo has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.