VTI vs SPY: Which ETF is better

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

  • 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

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.
  • Small-cap stocks only make up a small percentage of the fund’s total composition.
  • Employs a passively managed, index-sampling strategy.

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

VTISPY
1 Year Return15.41%9.86%
3 Year Return20.45%14.19%
5 Year Return14.45%11.99%
10 Year Return13.69%12.02%

SPY fund before and after tax

SPY NAV

VTI after tax return

VTI hypothetical growth

VTI vs SPY: key findings and overlap

VTISPY
DescriptionVanguard Total Stock Market ETF 

SPDR S&P 500 ETF Trust

Asset ClassDomestic Stock - General/ Large BlendEquity: U.S. - Large Cap
Net Assets840.92B$398.6M
YTD Daily Total Return-26.62%28.71%
Inception Date5/24/20011/22/1993
Expense Ratio0.03%0.0945%
Minimum investmentN/AN/A
Number of stocks4070505
PE ratio21.8x22.5x
PB ratio4.0x4.71x

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: Fund top holdings

Allocation
Apple Inc3.6%
Microsoft Corp.3.1%
Alphabet Inc.2.1%
Amazon1.7%
Tesla1%
Meta 0.8%
NVIDIA0.8%
Berkshire Hathaway0.7%
Johnson & Johnson0.6%
UnitedHealth Group Inc.

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?

Both ETFs focus on different segments of the market. VTI focuses on total market, while SPY looks at large cap. 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 VTI for its higher yield and wider exposure to companies beyond large-cap ones.

Related article

VTI vs VOO: which index fund is a better investment (updated 2020) 

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