VTI vs. SPY: Which is Best For You?
SPY and VTI are both excellent options for a core stock investment holding.
However, there are several differences you must understand before you can determine which is best for you!
VTI vs. SPY: Key Characteristics
As broad-based ETFs, VTI and SPY have historically tracked relatively close to each other. However, considering the different indices tied to each, expect minor deviations in the long run.
VTI holds just about every company on the stock market, giving it more diversity.
On the other hand, SPY only tracks the top 500 large-cap U.S. companies, giving it less exposure to less significant companies.
Analyzing Dividends: VTI vs. SPY
VTI has a dividend yield of around 1.59%, while SPY has a dividend yield of around 1.45%.
Therefore, VTI and SPY both pay dividends, and the yields are relatively similar.
The dividend yield will change over time based on market conditions, but the difference is negligible when comparing VTI and SPY since both are broad-market ETFs.
Comparing Expense Ratios: VTI vs. SPY
VTI has an expense ratio of 0.03%, while SPY has an expense ratio of 0.09%.
Vanguard founder Jack Bogle swore by the significance of low expense ratios in long-term investment success.
However, SPY’s expense ratio of 0.09% is still much lower than the average, making both good options for long-term investing.
Performance & Holdings of VTI and SPY
VTI holds over 3,500 companies, which is essentially the entire stock market.
SPY holds the top 500 U.S. large-cap companies on the stock market, which only includes stable and proven companies.
Therefore, VTI is more diversified as it holds small-cap, medium-cap, and large-cap stocks. Even with these differences, the performance of VTI and SPY is hardly different.
If you want exposure to only significant large-cap companies, SPY is best for you. If you want quick exposure to the entire stock market, VTI is best for you.
Alternatively, you can invest in both for maximum diversity.
VTI vs. SPY - Which is Best For You?
Overall, you’re likely not going to see much of a performance difference when choosing between VTI and SPY.
However, if you have any questions and want some hands-on help, you can join the HaiKhuu Trading Community for free!
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Frequently Asked Questions
Is VTI better than SPY?
There’s no direct ‘better’ in the world of ETFs as it circles back to individual investment goals and strategies. While SPY tracks the S&P 500 and, thus, embodies a focus on larger, established companies, VTI envelops a broader spectrum, encompassing small, mid, and large-cap equities. VTI’s low expense of 0.03% could also make it a preferred alternative to its counterpart, SPY, which stands at 0.09%.
Should I own both VTI and SPY?
In the spirit of portfolio diversification, it’d be strategic to include both VTI and SPY in your portfolio. Effectively, SPY gets you the perks of the booming large-cap sector riding on the top 500 US companies, and VTI gets you a ticket on the mid and small-cap ride, thus expanding your reach.
Is VTI the best index fund?
Establishing the best index fund is subjective to each investor’s agenda. If a broad exposure to the US equity market from large to small-caps is top on your list, coupled with low expense ratios, VTI could be your match.
