VOO vs VTI: what is the difference and which should you buy?

VOO vs VTI is one of the most common questions in investing communities. Both are low-cost Vanguard index funds, both track US stocks, and both have delivered similar returns over time. So what is the actual difference, and does it matter?

Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Consult a qualified financial adviser before making investment decisions. Returns and other figures cited below are approximate and change over time.

What each fund holds

VOO tracks the S&P 500 index, which includes approximately 500 of the largest US companies by market capitalisation. It is a large-cap fund, meaning it holds only the biggest companies in the market: Apple, Microsoft, Amazon, and so on.

VTI tracks the CRSP US Total Market Index, which includes around 3,500 stocks across the entire US market. This means VTI holds everything VOO holds, plus mid-cap and small-cap stocks that are not in the S&P 500.

In practice, because the S&P 500 companies make up roughly 85% of the total US market by capitalisation, VTI's performance is heavily driven by the same large-cap stocks that dominate VOO. The remaining 15% comes from mid-cap and small-cap companies.

Performance comparison

Historically, VOO and VTI have delivered nearly identical returns. The difference in any given year is typically less than 0.5%, and over longer periods, it often narrows even further. Neither fund has a consistent edge over the other.

Both funds have expense ratios of around 0.03%, making them among the cheapest index funds available.

The overlap question

VOO and VTI have roughly 85% overlap in their holdings, because VTI contains the entire S&P 500 plus additional stocks. You can see the exact overlap using our ETF compare tool.

Do not hold both VOO and VTI. Since VTI already contains everything in VOO, holding both means you are overweighting large-cap stocks without gaining meaningful diversification. Pick one and stick with it.

When VTI makes more sense

• You want broader diversification. VTI's mid-cap and small-cap holdings add exposure to faster-growing companies that are not yet in the S&P 500.
• You want a single-fund US solution. VTI covers the entire US market in one purchase.
• You believe in small-cap premium. Some research suggests small-cap stocks outperform large caps over very long periods, though this is debated.

When VOO makes more sense

• You prefer a well-known benchmark. The S&P 500 is the most widely followed index in the world, making it easy to compare your performance.
• You only want large caps. If you believe large, established companies are the better long-term bet, VOO gives you exactly that without dilution from smaller companies.
• Slightly higher liquidity. VOO is one of the most traded ETFs in existence, though VTI is also highly liquid.

Tax efficiency

Both VOO and VTI are highly tax efficient. As index funds with low turnover, they rarely distribute capital gains. In a taxable account, the difference in tax efficiency between the two is negligible and should not be a deciding factor.

The bottom line

The difference between VOO and VTI is real but small. VTI gives you slightly broader exposure to the US market by including mid-cap and small-cap stocks. VOO gives you focused exposure to the 500 largest companies. Over long periods, their returns have been nearly identical.

If you are starting from scratch, VTI is marginally more diversified. If you already hold VOO, there is no compelling reason to switch. The most important thing is to pick one, invest consistently, and not overthink it.

Check the overlap between any two ETFs with our free ETF compare tool, no account needed.