The Vanguard S&P 500 ETF Is Unstoppable -- But There's 1 ETF I Like Even More
Key Points
The Vanguard S&P 500 ETF (VOO) recently made history as the first ETF with $1 trillion of investor assets.
It has outperformed the Vanguard Total Stock Market ETF (VTI) over the past 10 years.
For investors seeking long-term diversification, the Total Stock Market ETF could be a better choice.
- 10 stocks we like better than Vanguard Total Stock Market ETF ›
If you want the easiest, lowest-cost way to invest in the stock market, one popular Vanguard exchange-traded fund can do what you need. The Vanguard S&P 500 ETF (NYSEMKT: VOO) recently made headlines, and history, by surpassing a total of $1 trillion of investor assets.
Many people are entrusting their savings to this one ETF that owns the stocks of the entire S&P 500 index -- and it's been a great investment. For the past 15 years since the fund's inception in September 2010, the Vanguard S&P 500 ETF has delivered 15.18% annualized returns.
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But I don't own it. I've got nothing against this fund, but there's a different Vanguard index fund in my portfolio that I like even better. It's called the Vanguard Total Stock Market ETF (NYSEMKT: VTI). This fund owns 3,494 stocks, and so far in 2026, it is delivering slightly better performance: its shares are up 8.38% year to date, while the S&P 500 fund's share price is up 8.11%.
That's a small difference of only 27 basis points. But in the long run, small differences add up. Let's take a closer look at which ETF could be the better choice for your money.
Image source: Getty Images.
VTI vs. VOO: Head-to-head comparison
The Vanguard Total Stock Market ETF (VTI) and the Vanguard S&P 500 ETF (VOO) have a lot in common. These are both popular, highly diversified funds that allow investors to buy the broad U.S. stock market for low fees. Here's a quick high-level comparison of these two ETFs:
|
Metric |
Vanguard S&P 500 ETF (VOO) |
Vanguard Total Stock Market ETF (VTI) |
|---|---|---|
|
Number of stocks |
505 |
3,494 |
|
Year-to-date returns (by net asset value) |
8.42% |
8.71% |
|
10-year average annual total returns (by net asset value) |
15.61% |
15.10% |
|
Expense ratio |
0.03% |
0.03% |
|
Price-to-earnings (P/E) ratio |
27.73 |
26.99 |
Data source: Vanguard.
There's nothing wrong with buying the entire S&P 500. That's a good start at a well-diversified portfolio for investors' goals. But the Vanguard Total Stock Market ETF is even more diversified. Instead of owning "only" 505 stocks like VOO, VTI holds 3,494 stocks. And the Vanguard Total Stock Market ETF might be slightly undervalued -- its price-to-earnings (P/E) ratio is a little lower than the S&P 500 fund.
What stocks are in VOO and VTI?
Before you choose an ETF to buy, it's important to dig into the details of what's in the fund. Here's a head-to-head breakdown of the top five sector holdings of each of these two Vanguard ETFs:
|
Vanguard S&P 500 ETF (VOO) |
Vanguard Total Stock Market ETF (VTI) |
|---|---|
|
Information technology (35% of the fund) |
Technology (39.3% of the fund) |
|
Financials (12%) |
Consumer discretionary (13.4%) |
|
Communication services (11%) |
Industrials (12.4%) |
|
Consumer discretionary (10%) |
Financials (10.3%) |
|
Industrials (8.8%) |
Healthcare (8.7%) |
Data source: Vanguard.
These two funds use slightly different terminology for their sector holdings. At first glance, it looks like the Vanguard Total Stock Market ETF is more tech-heavy. But if you look at the top five stock holdings, the picture changes:
|
Vanguard S&P 500 ETF (VOO) |
Vanguard Total Stock Market ETF (VTI) |
|---|---|
|
Nvidia(NASDAQ: NVDA): 7.85% of the fund |
Nvidia: 6.63% of the fund |
|
Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL): 6.52% combining Class A and Class C shares |
Alphabet: 5.77% combining Class A and Class C shares |
|
Apple(NASDAQ: AAPL): 6.45% |
Apple: 5.74% |
|
Microsoft(NASDAQ: MSFT): 4.90% |
Microsoft: 4.36% |
|
Amazon(NASDAQ: AMZN): 4.19% |
Amazon: 3.69% |
|
Total weight of top five holdings: 29.91% of fund |
Total weight of top five holdings: 26.19% of fund |
Data source: Vanguard.
Both funds are top-heavy with the same major tech names that have dominated the U.S. stock market for the past several years. But the Vanguard Total Stock Market ETF is slightly less concentrated in fast-growing tech stocks.
Despite holding fewer stocks, the Vanguard S&P 500 ETF has delivered slightly higher returns than the other fund during the past ten years. If you had invested $10,000 in the Vanguard S&P 500 ETF (VOO) 10 years ago, that money would've grown to $41,520 today.
VOO Total Return Level data by YCharts
That same 10-years-ago $10,000 investment in the Vanguard Total Stock Market ETF would've grown to $39,720 -- about $1,800 less. Does that mean VOO is better than VTI for the future? I don't think so, and I'm betting my money on it.
Why buy VTI instead of VOO
Both of these Vanguard ETFs are good choices if you want to own a broad index of the U.S. stock market. They're both on the list of best Vanguard ETFs. Both have delivered similar performance in recent years. Both are low-cost index funds with the same ultra-low expense ratio of 0.03%.
However, I personally own the Vanguard Total Stock Market ETF (VTI) but not the Vanguard S&P 500 ETF (VOO). That's because I want the most diversified portfolio possible. I want to own more than just 500 stocks; I want thousands of stocks.
I want to own companies of all sizes: large caps, mid-caps, and small caps. In the long run, the stock market will help pick the winners and reshuffle the index. Some of today's small-caps might become the most successful companies of the future, and I want to own them all.
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Ben Gran has positions in Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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