VTI vs VV: Two Popular Vanguard ETFs

If you’re looking to invest in the stock market, you might have heard of ETFs or exchange-traded funds.

ETFs are a type of investment fund that can be traded on stock exchanges. They are similar to mutual funds, but they are traded like individual stocks.

Two popular ETFs that investors often consider are VTI vs VV, both of which are managed by Vanguard.

VTI vs VV: Two Popular Vanguard ETFs
VTI vs VV: Two Popular Vanguard ETFs

VTI, or Vanguard Total Stock Market ETF, is designed to track the performance of the CRSP US Total Market Index. It invests in a diverse range of companies across all sectors and market capitalizations, making it a good option for investors who want broad exposure to the U.S. stock market.

VV, or Vanguard Large-Cap ETF, on the other hand, focuses on large-cap companies. It tracks the performance of the CRSP US Large Cap Index and invests in the largest U.S. companies by market capitalization. This ETF is a good option for investors who want exposure to well-established companies that have a track record of stability and growth.

Key Takeaways VTI vs VV

  • VTI and VV are two popular ETFs managed by Vanguard.
  • VTI provides broad exposure to the U.S. stock market, while VV focuses on large-cap companies.
  • When choosing between VTI and VV, investors should consider their investment goals and risk tolerance.

Understanding ETFs VTI vs VV

ETF Investment Basics

Exchange-traded funds (ETFs) are a type of investment fund that is traded on stock exchanges. ETFs hold a basket of assets, such as stocks, bonds, or commodities, and offer investors exposure to a diversified portfolio.

ETFs are similar to mutual funds, but they trade like stocks and can be bought and sold throughout the trading day. ETFs are popular among investors because they offer low fees, tax efficiency, and flexibility.

When you invest in an ETF, you are buying shares of the fund, which represent a portion of the underlying assets. The value of the ETF shares fluctuates throughout the trading day, based on the performance of the underlying assets.

Vanguard’s Role in ETFs

Vanguard is one of the largest providers of ETFs, with a wide range of offerings that cover various asset classes and investment strategies. Vanguard’s ETFs are known for their low fees and passive management style.

Vanguard’s ETFs are designed to track a specific index, such as the S&P 500 or the Total Stock Market Index. This means that the ETF holdings mirror the composition of the index, providing investors with exposure to a broad range of stocks.

Vanguard’s ETFs are also known for their tax efficiency, which is achieved through a unique structure that minimizes capital gains distributions. This can result in lower taxes for investors compared to other investment vehicles.

In summary, ETFs are a popular investment vehicle that offers investors exposure to a diversified portfolio of assets. Vanguard is a leading provider of ETFs, offering low fees and passive management. When you invest in Vanguard’s ETFs, you are buying shares of the fund, which represent a portion of the underlying assets.

VTI: Vanguard Total Stock Market ETF

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If you’re looking for an ETF that offers exposure to the entire US stock market, look no further than VTI: Vanguard Total Stock Market ETF. This ETF seeks to track the CRSP US Total Market Index, which includes small-, mid-, and large-cap stocks from the entire US stock market.

VTI Investment Strategy

VTI invests in a wide range of stocks, including those from the technology, healthcare, financial, and consumer sectors. The fund aims to provide investors with broad market exposure while keeping costs low.

VTI Holdings and Sectors

As of November 4, 2023, VTI’s top holdings include Apple Inc., Microsoft Corp., Amazon.com Inc., and Alphabet Inc. Class A. The fund is heavily weighted towards the technology sector, which makes up nearly 30% of its holdings. Other top sectors include healthcare, consumer discretionary, and financials.

VTI Performance Metrics

VTI has a low expense ratio of 0.03%, making it an attractive option for investors looking to keep costs low. The fund also has a dividend yield of around 1.3%.

Over the past 10 years, VTI has provided an average annual return of around 16.3%. However, past performance is not a guarantee of future results, and investors should always do their own research before making any investment decisions.

Overall, VTI is a solid option for investors seeking broad market exposure at a low cost.

VV: Vanguard Large-Cap ETF

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If you’re looking for a large-cap ETF that tracks the performance of the CRSP US Large Cap Index, then VV, or the Vanguard Large-Cap ETF, may be a good option for you. Here’s a closer look at VV’s investment approach, top holdings, performance, and returns.

VV Investment Approach

VV seeks to track the performance of the CRSP US Large Cap Index, which includes large-cap U.S. stocks. The fund uses a passive investment approach, which means that it aims to replicate the holdings and performance of the index rather than trying to beat it.

VV invests in a diversified portfolio of large-cap U.S. stocks, which helps to spread out the risk. The fund’s holdings include stocks from a variety of sectors, including technology, healthcare, and consumer goods.

VV Top Holdings Analysis

VV’s top holdings are dominated by large-cap tech companies, with Apple, Microsoft, and Amazon taking the top three spots. Other top holdings include Facebook, Alphabet (Google’s parent company), and Berkshire Hathaway.

The fund’s top holdings are well-diversified across sectors, with tech, healthcare, and consumer goods being the top three sectors represented in the portfolio.

VV Performance and Returns

Over the past 10 years, VV has provided an average annual return of approximately 17.6%, which is slightly higher than the S&P 500’s average annual return of approximately 16.6% over the same period. However, past performance is not a guarantee of future results.

VV has an expense ratio of 0.04%, which is slightly higher than the Vanguard Total Stock Market ETF (VTI)’s expense ratio of 0.03%. VV also has a dividend yield of approximately 1.5%, which is slightly lower than VTI’s dividend yield of approximately 1.6%.

Overall, VV may be a good option for investors who are looking for a large-cap ETF that tracks the performance of the CRSP US Large Cap Index. The fund’s top holdings are well-diversified across sectors, and it has provided solid returns over the past 10 years. However, it’s important to remember that past performance is not a guarantee of future results, and investors should always do their own research before making any investment decisions.

Comparative Analysis

When choosing between VTI and VV, it is important to consider factors such as risk, cost efficiency, and market performance comparison.

Risk and Volatility

Both VTI and VV are considered to be low-risk investments, as they track large-cap stocks in the US market. However, VV has a slightly lower volatility than VTI, which means that it may be a better choice for investors who are more risk-averse. According to PortfoliosLab, VV has a volatility of 2.87%, while VTI has a volatility of 3.08%.

Cost Efficiency

When it comes to cost efficiency, VTI has a lower expense ratio than VV. As of 2023, VTI has an expense ratio of 0.03%, while VV has an expense ratio of 0.04%, according to MoneyMainst. This means that VTI may be a better choice for investors who are looking to minimize their expenses.

Market Performance Comparison

When comparing the market performance of VTI and VV, it is important to consider factors such as YTD return, Sharpe ratio, correlation, alpha, and beta. According to ETF.com, VTI has outperformed VV in terms of YTD return, with a return of 23.5% compared to VV’s return of 22.5%. However, VV has a slightly higher Sharpe ratio than VTI, which means that it may be a better choice for investors who are looking for a higher risk-adjusted return. In terms of correlation, both VTI and VV have a high correlation to the US market, which means that they are both good choices for investors who are looking to track the performance of the US market. Finally, both VTI and VV have a beta of 1, which means that they are both highly correlated to the US market and are not suitable for investors who are looking for diversification.

Overall, when choosing between VTI and VV, it is important to consider your investment goals and risk tolerance. While VTI may be a better choice for investors who are looking for lower expenses and higher YTD returns, VV may be a better choice for investors who are more risk-averse and are looking for a higher risk-adjusted return.

Investor Considerations

Portfolio Diversification

When considering whether to invest in VTI or VV, you should take into account your overall portfolio diversification. Both ETFs track the U.S. stock market and are classified as large-cap blend funds. However, VTI provides exposure to a broader range of U.S. stocks, while VV focuses on a smaller subset of large-cap stocks. This means that VTI may offer more diversification within the U.S. stock market, while VV may be more concentrated in a smaller number of stocks.

Investment Time Horizon

Your investment time horizon is another important consideration when choosing between VTI and VV. If you have a longer investment time horizon, VTI may be a better choice as it provides exposure to a broader range of U.S. stocks, including small-cap and mid-cap stocks. These stocks may offer higher growth potential over the long term. On the other hand, if you have a shorter investment time horizon, VV may be a better choice as it focuses on larger, more established companies that may be less volatile.

Overall, both VTI and VV are solid choices for investors looking to gain exposure to the U.S. stock market. VTI may be a better choice for investors looking for broader diversification and higher growth potential over the long term, while VV may be a better choice for those with a shorter investment time horizon or those looking for exposure to a smaller subset of large-cap stocks.

When choosing between VTI and VV, it’s important to consider your overall investment strategy and goals. Both ETFs are classified as large-cap blend funds and offer exposure to the U.S. stock market. However, VTI also includes exposure to small-cap and mid-cap stocks, while VV focuses solely on large-cap stocks. Additionally, both ETFs are part of the Vanguard family and are known for their low-cost structure.

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