VTV vs. SPTM: Should Investors choose Vanguard's Value ETF or the S&P 1500's Stability?

The main differences between the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (NYSEMKT:SPTM) and Vanguard Value ETF (NYSEMKT:VTV) come down to yield, sector tilts, and recent performance, with SPTM showing higher growth and volatility, while VTV offers a higher income payout and more defensive sector exposure.

Both the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) and Vanguard Value ETF (VTV) aim to provide broad, low-cost U.S. equity exposure, but their approaches and portfolio makeups diverge. SPTM covers the whole U.S. stock market across all capitalizations, while VTV focuses on large-cap value stocks, tracking a value-tilted index.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The one-year return represents total return over the trailing 12 months.

VTV is slightly more expensive than SPTM, but the difference is marginal. However, VTV may appeal to income-focused investors, as it offers a one percentage point higher dividend yield than SPTM.

Performance & risk comparison

What's inside

Vanguard Value ETF focuses on large-cap value stocks, with its portfolio leaning toward financial services (25%), healthcare (15%), and industrials (13%). The fund holds 331 positions, with leading allocations to JPMorgan Chase & Co., Berkshire Hathaway, and Johnson & Johnson. With a track record stretching roughly 22 years, VTV has established itself as a core value holding for long-term investors, delivering sector tilts that may help cushion volatility during growth stock selloffs.

In contrast, SPTM provides investors with broader exposure, encompassing 1,510 U.S. stocks across all market capitalizations. Its portfolio is heavier in technology (34%), financial services (13%), and consumer cyclicals (11%), with top weights in Nvidia, Apple, and Microsoft. SPTM’s more growth-oriented tilt means it has recently delivered higher returns but also experienced larger drawdowns.

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

What this means for investors

Since 2004, SPTM has delivered total return growth of 10.2% annually compared to VTV's mark of 9.3%. Over the last decade, these figures were even stronger, with SPTM growing by 14.5% and VTV up 11.8%. That said, both ETFs slightly lagged behind the S&P 500, which rose 14.7% annually over that period.

While the S&P 500 may have had higher total returns recently, I'd be more interested in the two ETFs in this article. SPTM, for example, holds 1,000 extra stocks on top of the typical S&P 500 index, adding better "whole-market" breadth. Furthermore, its allocation to the Magnificent Seven (plus Broadcom) is only 34% of its portfolio compared to 38% for the S&P 500.

Meanwhile, VTV avoids most of the immensely popular Magnificent Seven names and instead focuses on cheaper, steady-Eddie stocks with higher dividend yields. While VTV has underperformed due to the recent mega-cap tech stock boom and AI's rise to prominence, its P/E ratio of 21, lower level of risk, and 2.1% dividend yield make it a compelling selection in my eyes.

Both of these ETFs are great options. Ultimately, which is the better selection just depends on each investor's individual preferences. Personally, I would choose VTV as it would give me exposure to dividend-paying steady-Eddie stocks that I don't own as many of, as I currently prioritize buying growth stocks.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges and holds a basket of securities.
Expense ratio: The annual fee, expressed as a percentage, that a fund charges its shareholders.
Dividend yield: Annual dividends paid by a fund divided by its current price, shown as a percentage.
Beta: A measure of an investment’s volatility compared to the overall market; 1.0 means equal volatility.
Drawdown: The decline from a fund’s peak value to its lowest point over a specific period.
Large-cap: Companies with a large market capitalization, typically over $10 billion.
Value stocks: Shares of companies considered undervalued compared to their fundamentals, often with lower prices and higher dividends.
Sector tilt: When a fund allocates more of its portfolio to specific industry sectors than the broader market.
Consumer cyclicals: Companies whose business performance is closely tied to economic cycles, like retailers or automakers.
AUM: Assets under management; the total market value of assets a fund manages for investors.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.