After a year of working, I made my first investment of $10K into VTI. My […]
This is a comparison of VTI vs SPY. Buying into ETFs such as VTI or SPY is the simplest way to build wealth overtime. VTI represents Vanguard Total Stock Market ETF while SPY refers to SPDR S&P 500 ETF Trust.
The advantage of an index fund/ETF over an actively managed fund, is its ability to outperform individual stocks over time. According to Vanguard, in a study of index funds vs active funds, 87% of Vanguard mutual funds and ETFs performed better than their peer-group averages over the past 10 years (For the period ended December 31, 2019)
VTI represents Vanguard Total Stock Market ETF while SPY refers to SPDR S&P 500 ETF Trust
VTI is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency.
Whereas the S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors.
SPY
- The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors
- Tracks the S&P 500 index which includes the 500 largest cap companies in the United States
- The S&P 500® Index is composed of selected stocks from five hundred (500) issuers, all of which are listed on national stock exchanges and spans over approximately 24 separate industry groups.
- Small-cap companies are not included in the fund
- The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index
VTI
- Seeks to track the performance of the CRSP US Total Market Index.
- Large-, mid-, and small-cap equity diversified across growth and value styles.
- The fund remains fully invested.
- Employs a passively managed, index-sampling strategy.
- Low expenses minimize net tracking error.
Why should you consider an ETF
If you seek a low-cost way to gain broad exposure to the U.S. stock market/ Global market, you may consider these index funds. Because VTI and SPY (and similar investments) come with built-in diversification, they involve less risk than individual stocks and bonds.
VTI and SPY: Historical Performance
| VTI | VOO | VT | SPY | VTSAX | |
| YTD return | -24.87 | -23.9 | -25.56 | -24.25 | -24.89 |
| 1 Year Return | -18 | -15.52 | -20.8 | -15.99 | -18.01 |
| 3 Year Return | 7.58 | 8.12 | 3.87 | 7.56 | 7.59 |
| 5 Year Return | 8.55 | 9.2 | 4.45 | 8.62 | 8.55 |
| 10 Year Return | 11.33 | 11.66 | 7.54 | 11.04 | 11.33 |
| Since Inception | 7.26 | 12.52 | 5.53 | 8.81 | 6.89 |
SPY performance history
VTI performance history
VTI hypothetical growth
VTI vs SPY: key findings and overlap (as of 30th Sep 2022)
| VTI | SPY | |
| Description | Vanguard Total Stock Market ETF | SPDR S&P 500 ETF Trust |
| Asset Class | Domestic Stock - General/ Large Blend | Equity: U.S. - Large Cap |
| Net Assets | $1.1T | $341.3M |
| YTD Daily Total Return | -26.62% | 28.71% |
| Inception Date | 5/24/2001 | 1/22/1993 |
| Expense Ratio | 0.03% | 0.0945% |
| Minimum investment | N/A | N/A |
| Number of stocks | 4066 | 503 |
| PE ratio | 17.1x | 16.5x |
| PB ratio | 3.1x | 3.48x |
| Distribution schedule | Quarterly | Quarterly |
Expense ratio: While SPY has an expense ratio of 0.09%, which is still relatively low, the difference in fees will add up over time. This means that you would pay $3 in fees for a $10,000 investment in VTI and $9 in fees for a $10,000 investment in its SPY.
Since net assets of both index funds exceed 100 billion dollars, both ETFs are tradable.
VTI Sector Breakdown
VTI: Fund top holdings
| Allocation | |
| Apple Inc | 5.9% |
| Microsoft Corp. | 4.8% |
| Amazon | 2.7% |
| Tesla | 1.9% |
| Alphabet Class A | 1.6% |
| Alphabet Class B | 1.4% |
| UnitedHealth Group Inc. | 1.3% |
| Berkshire Hathaway Class B | 1.2% |
| Johnson & Johnson | 1.2% |
| Exxon Mobil | 1% |
SPY Top 10 holdings
SPY Top sectors
Caveat
The key risk for these funds is the volatility that comes with its full exposure to the stock market. Both carry the inherent risk of loss associated with owning assets that follow the stock market.
Differences between VTI vs SPY
Liquidity
Both can be bought or sold throughout the trading day.
They provide real-time pricing since they are an ETF, so you can see their prices change throughout the day during trading hours.
Unlike a mutual fund, it isn’t priced until the trading day is over. You will not know the price until you’ve placed your trade. As Vanguard explains on their investment page:
Regardless of what time of day you place your order, you’ll get the same price as everyone else who bought and sold that day. That price isn’t calculated until after the trading day is over.
Share Price
Both their share price changes according to the stock market's fluctuations.
Expense Ratio
It's essential that expense ratio is kept low as it can affect the performance of the index funds. VTI is more affordable than SPY.
Minimum Fees
- For the price of 1 share
How to buy
You can consider using moomoo/ TD Ameritrade/Tiger Brokers invest in NYSE.
Read the guides here: moomoo, Tiger Brokers
VTI vs SPY summary – which one is better?
YTD performance of VTI is -21.46%. This is lower than than SPY's -23.91% (before tax).
Both ETFs focus on different segments of the market. VTI focuses on total market (>4K stocks), while SPY looks at large cap (503 stocks). If your investment decision is based on a long-term growth approach, either funds will be a good addition to your portfolio. I personally prefer VOO for its better returns in both good and bad times. However, I am more inclined to invest in dividend-accumulating ETFs which are based in LSE markets to enjoy a lower withholding tax.
Related article
VTI vs VOO: which index fund is a better investment (updated 2020)
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