If you’re looking to invest in ETFs, you might be wondering which one to choose between VTI and VTV.
Both are popular Vanguard funds that are often compared against each other. While VTI tracks the total US stock market, VTV focuses on the value segment of the S&P 500.
In this article, we’ll provide an overview of both VTI vs VTV, and compare them to help you make an informed investment decision.
VTI and VTV are both ETFs that are designed to provide exposure to the US stock market. VTI is a market-cap-weighted index fund that tracks the CRSP US Total Market Index, which includes all US stocks, both large and small. On the other hand, VTV is a value-oriented fund that tracks the performance of the S&P 500 Value Index, which includes large-cap companies that are considered undervalued by the market. While both funds have similarities, they have different investment strategies that can make them suitable for different types of investors.
Comparing VTI and VTV can help investors determine which fund is a better fit for their portfolio. It’s important to consider factors such as performance, cost, holdings, and investment strategy when making an investment decision. In the next section, we’ll provide a comparative analysis of VTI and VTV to help you make an informed decision.
Key Takeaways VTI vs VTV
- VTI and VTV are both popular Vanguard ETFs that provide exposure to the US stock market, but have different investment strategies.
- VTI tracks the total US stock market, while VTV focuses on the value segment of the S&P 500.
- When comparing VTI and VTV, it’s important to consider factors such as performance, cost, holdings, and investment strategy.
Overview of VTI vs VTV
When it comes to investing in the stock market, exchange-traded funds (ETFs) have become a popular choice for many investors. Two such ETFs are VTI and VTV, both of which are offered by Vanguard. In this section, we will provide an overview of VTI and VTV to help you understand the differences between these two ETFs.
Understanding VTI
VTI, or the Vanguard Total Stock Market ETF, seeks to track the performance of the CRSP US Total Market Index. This index includes stocks of all sizes from the U.S. equity market, including small-, mid-, and large-cap stocks. As a result, VTI provides investors with exposure to the entire U.S. stock market, making it a great option for those who want to invest in a diversified portfolio.
One of the benefits of investing in VTI is that it has a low expense ratio of 0.03%, which means that investors can keep more of their returns. Additionally, VTI has a high trading volume, which means that it is easy to buy and sell shares.
Understanding VTV
VTV, or the Vanguard Value ETF, seeks to track the performance of the CRSP U.S. Large Cap Value Index. This index includes large-cap U.S. stocks that have value characteristics, such as low price-to-earnings ratios and high dividends. As a result, VTV provides investors with exposure to large-cap value stocks in the U.S. equity market.
One of the benefits of investing in VTV is that it has a low expense ratio of 0.04%, which means that investors can keep more of their returns. Additionally, VTV has a high dividend yield, which means that investors can earn income from their investment.
In summary, VTI and VTV are both popular ETFs offered by Vanguard. VTI provides investors with exposure to the entire U.S. stock market, while VTV provides investors with exposure to large-cap value stocks in the U.S. equity market. Both ETFs have low expense ratios and are easy to buy and sell.
Comparative Analysis
When deciding between VTI and VTV, it’s important to compare key metrics and understand how they differ. In this section, we’ll analyze the expense ratio, performance, and dividend yield of each ETF to help you make an informed decision.
Expense Ratio Comparison
Expense ratio is an important factor to consider when choosing between VTI and VTV. VTI has a lower expense ratio of 0.03%, while VTV has an expense ratio of 0.04%. This means that VTI is slightly cheaper to own than VTV.
Performance Comparison
When it comes to performance, both VTI and VTV have a solid track record. However, VTI has historically outperformed VTV in terms of returns. According to etf.com, VTI has a five-year return of 17.97%, while VTV has a five-year return of 15.46%.
Dividend Comparison
If you’re looking for income, dividend yield is an important metric to consider. VTV has a higher dividend yield than VTI, with a yield of 2.67% compared to VTI’s yield of 1.57%. This means that VTV is a better choice if you’re looking for income.
It’s important to note that past performance is not indicative of future results. While VTI has historically outperformed VTV, there’s no guarantee that this will continue in the future. Additionally, while VTV has a higher dividend yield, this may not be sustainable in the long term.
In summary, VTI and VTV have different strengths and weaknesses, and the right choice depends on your individual investment goals and risk tolerance. If you’re looking for a low-cost ETF with strong historical performance, VTI may be the better choice. However, if you’re looking for income, VTV’s higher dividend yield may be more attractive.
Portfolio Considerations
When considering whether to invest in VTI or VTV, there are several portfolio considerations to take into account. Here are a few key factors to consider:
Diversification Benefits
Both VTI and VTV offer exposure to a diversified range of stocks. However, VTI has a broader scope, tracking the performance of the entire U.S. stock market, while VTV focuses on large-cap value stocks. Investing in both funds can provide complementary diversification benefits, as VTI provides exposure to growth stocks and small- and mid-cap stocks, while VTV provides exposure to value stocks. By investing in both funds, you can achieve a well-diversified portfolio that covers a wide range of stocks across the market spectrum.
Risk Analysis
When it comes to risk analysis, VTV may be a better choice for investors with a lower risk tolerance. VTV has historically exhibited lower volatility than VTI, meaning that it experiences smaller price fluctuations and is considered to be less risky based on this measure. However, it’s important to note that past performance is not necessarily indicative of future results, and both funds come with some level of risk.
Growth vs Value Investing
Another key consideration is whether you want to focus on growth or value investing. VTI is more heavily weighted towards growth stocks, while VTV focuses on value stocks. If you believe that value stocks are poised to outperform growth stocks, then VTV may be a better choice for you. However, if you believe that growth stocks will continue to outperform, then VTI may be the better choice.
Overall, the decision to invest in VTI or VTV will depend on your individual investment goals and risk tolerance. By understanding the diversification benefits, risk analysis, and growth vs value investing considerations, you can make an informed decision about which fund is right for your portfolio.
Sector and Holdings Breakdown
Sector Exposure
When it comes to sector exposure, VTI and VTV have some differences. VTI tracks the CRSP US Total Market Index and provides exposure to the entire US stock market. As such, it has a more diverse sector exposure. On the other hand, VTV tracks the CRSP US Large Cap Value Index and focuses on large-cap value stocks. As a result, it has a more concentrated sector exposure.
VTI has a higher exposure to the technology sector, with a weight of around 28% as of November 2023. This is largely due to the presence of tech giants like Apple, Microsoft, and Amazon in the index. VTV, on the other hand, has a higher exposure to sectors like healthcare, financials, and consumer staples. UnitedHealth, Johnson & Johnson, and Procter & Gamble are some of the top holdings of VTV.
Top Holdings Analysis
VTI and VTV have some overlap in their top holdings, but there are also some differences. As of November 2023, Apple is the top holding of VTI, with a weight of around 6%. Microsoft and Amazon are also among the top holdings of VTI. VTV’s top holdings, on the other hand, are more diverse and include companies like Berkshire Hathaway, Johnson & Johnson, and Procter & Gamble.
It’s worth noting that VTI has a higher weight in its top 10 holdings, with around 22% of the portfolio invested in these companies. VTV, on the other hand, has a lower weight in its top 10 holdings, with around 16% of the portfolio invested in these companies.
Overall, when it comes to sector and holdings breakdown, VTI and VTV have some differences. VTI has a more diverse sector exposure, with a higher weight in the technology sector. VTV, on the other hand, has a more concentrated sector exposure, with a higher weight in sectors like healthcare and consumer staples. The top holdings of the two ETFs also differ, with VTI having a higher weight in tech giants like Apple, Microsoft, and Amazon, while VTV’s top holdings are more diverse.
Investment Strategy and Decision Making
When comparing VTI vs VTV, it is important to consider your investment strategy and decision-making process. This section will cover two key aspects of investing: assessing risk and returns, and matching your investor profile.
Assessing Risk and Returns
Before making any investment decisions, it is important to assess the risk and return potential of each ETF. VTI is a diversified portfolio that tracks the performance of the entire U.S. stock market, while VTV focuses on value stocks. Both ETFs have a different risk profile, with VTV being considered less risky than VTI due to its focus on value stocks.
When assessing risk, it is important to consider the net assets of each ETF, as well as the expense ratio. VTI has a higher net asset value and a lower expense ratio compared to VTV, making it a more cost-effective option for investors.
Investor Profile Matching
Matching your investor profile to the right ETF is crucial for making informed investment decisions. If you are looking for long-term growth and are comfortable with higher risk, VTI may be the right choice for you. On the other hand, if you are more risk-averse and looking for stable returns, VTV may be a better fit for your investor profile.
It is also important to consider your investment goals and time horizon when choosing between VTI and VTV. If you are investing for the long term, VTI may be a better option due to its diversification and potential for higher returns. However, if you are investing for the short term or need stable returns, VTV may be a better fit.
In conclusion, when comparing VTI vs VTV, it is important to consider your investment strategy and decision-making process. Assessing risk and returns, and matching your investor profile, are crucial steps in making informed investment decisions.
