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VTI vs. VTIP: What’s The Difference?

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VTI and VTIP? And which fund is better?

The expense ratio of VTI is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%). VTI also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than VTIP over the past ten years.

In this article, we’ll compare VTI vs. VTIP. We’ll look at industry exposure and annual returns, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VTI’s and VTIP’s holdings, risk metrics, and fund composition and examine how these affect their overall returns.

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Summary

VTIVTIP
NameVanguard Total Stock Market Index Fund ETF SharesVanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
CategoryLarge BlendInflation-Protected Bond
IssuerVanguardVanguard
AUM1.26T50.67B
Avg. Return14.70%1.79%
Div. Yield1.26%1.35%
Expense Ratio0.03%0.05%

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

VTI’s dividend yield is 0.09% lower than that of VTIP (1.26% vs. 1.35%). Also, VTI yielded on average 12.90% more per year over the past decade (14.70% vs. 1.79%). The expense ratio of VTI is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%).

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Fund Composition

Holdings

VTI - Holdings

VTI HoldingsWeight
Apple Inc4.9%
Microsoft Corp4.6%
Amazon.com Inc3.33%
Facebook Inc Class A1.88%
Alphabet Inc Class A1.66%
Alphabet Inc Class C1.56%
Tesla Inc1.18%
Berkshire Hathaway Inc Class B1.09%
NVIDIA Corp1.07%
JPMorgan Chase & Co1.06%

VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.

VTIP - Holdings

VTIP Bond SectorsWeight
AAA99.87%
Others0.13%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Performance

Annual Returns

VTI vs. VTIP - Annual Returns

YearVTIVTIP
202020.95%4.97%
201930.8%4.83%
2018-5.13%0.54%
201721.16%0.82%
201612.68%2.71%
20150.4%-0.15%
201412.56%-1.17%
201333.51%-1.55%
201216.41%0.0%
20111.06%0.0%
201017.26%0.0%

VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% respectively.

The year 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.

Portfolio Growth

VTI vs. VTIP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$23,15614.70%
VTIP$10,000$11,3051.79%

A $10,000 investment in VTI would have resulted in a final balance of $23,156. This is a profit of $13,156 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.70%.

With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.

VTI’s CAGR is 12.90 percentage points higher than that of VTIP and as a result, would have yielded $11,851 more on a $10,000 investment. Thus, VTI outperformed VTIP by 12.90% annually.


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