VTV vs. VOO Analysis and Comparison
VTV and VOO are popular ETFs for core stock market investment holdings.
However, depending on your investment goals and risk tolerance, you must understand the differences between these funds to help you determine which is better for you.
VTV vs. VOO Overview
VOO tracks U.S. large-cap stocks
VTV tracks large-cap value stocks
VTV pays a higher dividend yield than VOO
VOO has a lower expense ratio than VTV
VTV and VOO are both Exchange Traded Funds (ETFs) by the Vanguard Group. They’re passively managed instruments, intending to mirror the performance of their respective underlying indices.
Launched on January 26, 2004, VTV follows the MSCI US Prime Market Value Index – an index drawn towards large-cap value stocks.
On the other hand, VOO keeps up with the S&P 500 Index, consisting of the top 500 U.S. companies, and was launched on September 7, 2010.
VTV vs. VOO - Expense Ratio Comparison
VOO - 0.03%
VTV - 0.04%
These are quite low compared to other ETFs in the market, making both VTV and VOO cost-efficient options for investors.
A low expense ratio translates to higher returns for investors in the long run, making it an important factor to mull over. Those who are keen on minimizing their fund costs may find either of these ETFs appealing.
Dividend Yield Comparison
VOO - 1.42%
VTV - 2.50%
Where dividend yields are considered, VTV steps up with a greater yield than VOO.
This discrepancy is mainly due to VTV’s value-centric strategy – value stocks often carry higher dividend yields to bring in investors.
If you’re someone leaning towards passive income or follow a value strategy, VTV might be enticing to you.
Holdings Comparison
VOO’s tie to the S&P 500 Index means it provides exposure to 500 of the largest U.S. companies, broadening to sectors like technology, health care, and consumer discretionary. The sizable presence of giants like Apple Inc., Microsoft Corp., and Amazon.com Inc. gives this ETF a tech-savvy flavor.
Conversely, VTV’s prime focus is on value stocks. It’s currently favored by sectors like financials, health care, and utilities. Dominated by financial powerhouses such as Berkshire Hathaway Inc., Exxon Mobil Corp., and Johnson & Johnson, VTV gives preferential entrance to stocks having value characteristics, like low price-to-earnings ratios.
Performance Comparison
Tides might favor VOO in a bull market, given its high exposure to the technology and consumer discretionary sectors, which often perform well in a flourishing economy.
However, VTV, with its tilt towards financials and utilities, typically stands resilient during market turbulence, suggesting a marginally safer haven during bearish markets.
Long-term, historical returns have also seasoned VOO with a better track record as of now. However, we should remember that past performance doesn’t guarantee future results.
VTV vs. VOO - Which is Better For You?
Determining which ETF is better for you banks fundamentally on your investment strategy and risk tolerance.
If you’re partial to capital appreciation and can stomach the occasionally capricious tech sector, VOO might give you that window of opportunity.
On the other end, if a blend of stability and reasonable growth through undervalued stocks is what you value, VTV could be the perfect suit.
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FAQ
Is VTV a good fund?
The Vanguard Value ETF (VTV) is a stellar fund that focuses on large-cap stocks perceived as undervalued. It has delivered solid returns over the past decade and a higher dividend yield than many of its counterparts. Therefore, if your strategy leans towards value investing, VTV could be a good fit for your portfolio.
Do VOO and VTV overlap?
There is some overlap between VOO and VTV. This is because the S&P 500, which VOO tracks, has several value stocks that also meet the criteria for inclusion in the index that VTV tracks. However, VTV lean towards value stocks makes it different from VOO, which encompasses both growth and value stocks.
