Your opinions: VTI or VOO?
Your opinions: VTI or VOO?
I own both of these positions, and there is obviously a lot of duplication in these funds. Which of these funds do you all feel is better to to have long term?
Re: Your opinions: VTI or VOO?
VTI. I think the non-S&P500 stocks in it are important to have, plus one probably doesn't have to worry about the S&P500 index being reconstituted and creating a taxable event.
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Re: Your opinions: VTI or VOO?
On paper VTI is more diversified, but VOO has slightly better performance. In my opinion both will do. I find them equally good, it's almost a matter of preference. "Do you like better a Ferrari or Lamborghini?"
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Re: Your opinions: VTI or VOO?
I hold both for tax loss harvesting purposes.
Re: Your opinions: VTI or VOO?
Yes, in theory VTI would be preferred for more obscure or less obscure reasons. A casual examination of data would fail to show that it makes any difference. Warren Buffett specifically recommended in off-the -cuff but repeated comments that S&P 500 is recommended but never said TSM was not just as good or better. Mr. Bogle supposedly asked him why and never got an answer. There are hundreds of posts somewhere expressing everyone's consternation about that.
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Re: Your opinions: VTI or VOO?
VTI. It is ever so slightly more diversified, more complete, and more "total" than the S&P 500.
Practically, it will make little difference over the long-term.
Practically, it will make little difference over the long-term.
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Re: Your opinions: VTI or VOO?
The most important thing here is that it can't make much difference. The S&P 500 represents 80% of the market, there simply can't be a huge difference between the S&P 500 and the whole market. Furthermore, the stocks that aren't in the S&P 500 have had an 87% correlation with the stocks that are, the difference is even less than it would be with something more exotic. Adding the stocks that are not in the S&P 500 to the S&P 500 does not add a whole lot of diversification.
The S&P 500 was intended to represent the total market when it was created in 1957, the "500" being the limit set by computing power at the time and the desire to be able to calculate it every hour. Passive investing did not start to get talked about until the early 1970s. The idea that small-caps were particularly important, and that precise capitalization boundaries were a fundamentally important way to divide up the market didn't really come in until the early 1980s. Having humans choose 500 "leading companies in leading industries" just seemed like a reasonable way to do it in 1957.
I am in Total Stock--the VTSAX mutual fund but that's the same thing as VTI--simply because it is a more accurate realization of what I wanted to do. I wanted to avoid stock-picking and just own everything. The S&P 500, and VOO comes very close. A total market index fund comes closer.
Because it's different from the total market, there will be times when the S&P 500 outperforms the total market and times when it underperforms. It ahs outperformed recently. There have been times when an S&P 500 index fund (blue) slightly underperformed the total market (red).
Source
If you think the S&P 500 is a curated collection of quality stocks that are better than the total market, eh, whatever. But don't expect it to outperform the total market all the time. But if your idea is selected stocks, you probably want something more focussed than the tiny amount of selection represented by the S&P 500.
The best reason I know for going with Total Stock is this. Last year, seemingly the whole investment world was obsessed with how the stock market was going to be shaken to the core by the addition of Tesla to the S&P 500, and smirking over how S&P 500 indexers get taken to the cleaners by shrewd investors, bidding up the price in the knowledge that dumb indexers would be forced to buy Tesla at any price on December 21st.
II could just sit there and shrug and say "I don't care, I'm a Total Stock indexer, I bought my Tesla stock ten years ago."
The S&P 500 was intended to represent the total market when it was created in 1957, the "500" being the limit set by computing power at the time and the desire to be able to calculate it every hour. Passive investing did not start to get talked about until the early 1970s. The idea that small-caps were particularly important, and that precise capitalization boundaries were a fundamentally important way to divide up the market didn't really come in until the early 1980s. Having humans choose 500 "leading companies in leading industries" just seemed like a reasonable way to do it in 1957.
I am in Total Stock--the VTSAX mutual fund but that's the same thing as VTI--simply because it is a more accurate realization of what I wanted to do. I wanted to avoid stock-picking and just own everything. The S&P 500, and VOO comes very close. A total market index fund comes closer.
Because it's different from the total market, there will be times when the S&P 500 outperforms the total market and times when it underperforms. It ahs outperformed recently. There have been times when an S&P 500 index fund (blue) slightly underperformed the total market (red).
Source
If you think the S&P 500 is a curated collection of quality stocks that are better than the total market, eh, whatever. But don't expect it to outperform the total market all the time. But if your idea is selected stocks, you probably want something more focussed than the tiny amount of selection represented by the S&P 500.
The best reason I know for going with Total Stock is this. Last year, seemingly the whole investment world was obsessed with how the stock market was going to be shaken to the core by the addition of Tesla to the S&P 500, and smirking over how S&P 500 indexers get taken to the cleaners by shrewd investors, bidding up the price in the knowledge that dumb indexers would be forced to buy Tesla at any price on December 21st.
II could just sit there and shrug and say "I don't care, I'm a Total Stock indexer, I bought my Tesla stock ten years ago."
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Re: Your opinions: VTI or VOO?
I suggest Vanguard Total Stock Market ETF (VTI) because a little more diversified than Vanguard S&P 500 ETF (VOO).
Over the 29 years since the creation of the first total stock market index fund the two types of funds have had almost identical performance, sometimes one fund type has had a little bit better performance, sometimes the other. Portfolio Visualizer, 1993-2021. I used the oldest share classes to get the longest period for comparison.
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Re: Your opinions: VTI or VOO?
A lot of people suggest VTI over VOO because of it being “more diversified”, but in reality it really isn’t as shown above. The correlation is extremely strong between the two. I think a more correct answer to this question is it simply doesn’t matter.
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Re: Your opinions: VTI or VOO?
More like Camry or Accord. Good, reliable values for the long run.Investor1986 wrote: ↑Tue Aug 03, 2021 12:15 pm On paper VTI is more diversified, but VOO has slightly better performance. In my opinion both will do. I find them equally good, it's almost a matter of preference. "Do you like better a Ferrari or Lamborghini?"
I actually think that VOO and VTI are fairly interchangeable, for most people.
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Re: Your opinions: VTI or VOO?
VTI is better because it has over 3500 stocks whereas VOO only has 500 stocks. More stocks provides more opportunity.
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Re: Your opinions: VTI or VOO?
If you want to really see the difference buy some XVF -- extended market. You'll notice its Beta is much higher than VOO. XVF is a 1.29 Beta vs. VOO at 1.0. I describe it as the 'emo' index of smaller stocks.
Most of the debate you will read is if that extra volatility is adequately compensated. Sometimes it seems to be-- other times it does not
I own VTI and some VT as a value the broader diversification. I also take very seriously the comments from Warren Buffet about VOO being the best bang for the buck.
I'd also rather buy VTI during an economic/market panic as the higher volatility XVF portion is likely responding even more dramatically.....
Most of the debate you will read is if that extra volatility is adequately compensated. Sometimes it seems to be-- other times it does not
I own VTI and some VT as a value the broader diversification. I also take very seriously the comments from Warren Buffet about VOO being the best bang for the buck.
I'd also rather buy VTI during an economic/market panic as the higher volatility XVF portion is likely responding even more dramatically.....
VTI is a modern marvel
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Re: Your opinions: VTI or VOO?
VTI. Smaller, perhaps more value in style. The difference between the two over the long haul will be minimal. If you have strong convictions that VOO is best, I would go with that, because the best choice is the one that you can stick with.
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Re: Your opinions: VTI or VOO?
For long term holding purposes, both will have very similar returns.
That's just the nature of things in a market cap weighted index fund.
Pick whichever you want and stick to it. Anything to simplify tax returns.
That's just the nature of things in a market cap weighted index fund.
Pick whichever you want and stick to it. Anything to simplify tax returns.
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Re: Your opinions: VTI or VOO?
Very little difference. Its interesting that only 60 stocks is good enough to have an index..............
Re: Your opinions: VTI or VOO?
VTI is my #1 holding VOO/SPY is my #2. Both have been excellent. I still play with individual stocks but these are my anchors. Nice thing about VTI/VOO is that they can be lifetime holdings with decent tax handling.
Re: Your opinions: VTI or VOO?
This. If I'm going for the whole market, then I'm going for the whole marketUpperNwGuy wrote: ↑Tue Aug 03, 2021 3:26 pm VTI is better because it has over 3500 stocks whereas VOO only has 500 stocks. More stocks provides more opportunity.
Re: Your opinions: VTI or VOO?
Such a statement cannot be made in the present tense, it can only be made for a time period in the past. There were periods when VTI outperformed VOO, and vice versa. In the past 1 year, VTI outperformed VOO 38.54% vs 36.36%.Investor1986 wrote: ↑Tue Aug 03, 2021 12:15 pm On paper VTI is more diversified, but VOO has slightly better performance.
And what do you mean "on paper" VTI is more diversified? It absolutely is more diversified even if it isn't a huge difference.
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Re: Your opinions: VTI or VOO?
Always VTI. End of story.
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Re: Your opinions: VTI or VOO?
Both. Tax loss harvesting.
Re: Your opinions: VTI or VOO?
I like VTI and VUG....just my preference.
Re: Your opinions: VTI or VOO?
Bingo! Never underestimate good growth stock mutual funds that actually BEAT the S&P.
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Re: Your opinions: VTI or VOO?
+1. ^^^THIS!!!
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Re: Your opinions: VTI or VOO?
Why diversify less when you could diversify more? Speaking of which, VT is better than either of those ETFs
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Your opinions: VTI or VOO?
Though not in taxable though due to the loss of the foreign tax credit. Also in a super high tax bracket, all international may be better in tax advantaged accounts. But VT is fine in a tax advantaged account.Noobvestor wrote: ↑Wed Aug 04, 2021 11:57 pm Why diversify less when you could diversify more? Speaking of which, VT is better than either of those ETFs
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Re: Your opinions: VTI or VOO?
Anon_Investor, did you mean not in tax deferred? I thought placing international stock funds in a taxable was optimal peranon_investor wrote: ↑Thu Aug 05, 2021 12:10 amThough not in taxable though due to the loss of the foreign tax credit. Also in a super high tax bracket, all international may be better in tax advantaged accounts. But VT is fine in a tax advantaged account.Noobvestor wrote: ↑Wed Aug 04, 2021 11:57 pm Why diversify less when you could diversify more? Speaking of which, VT is better than either of those ETFs
https://www.bogleheads.org/wiki/Tax-eff ... _placement
Just want to make sure I've got my head on straight. Thanks!
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Re: Your opinions: VTI or VOO?
Actually, it really depends on your marginal tax rates (Fed+State+NII). Someone in the highest tax bracket in a high income tax state is also going to subject to NII tax on dividend income. International generally has a higher dividend yield AND larger % of unqualified dividends (subject to ordinary income tax rates + NII tax). So the tax drag is going to actually be LARGER than the foreign tax credit.StartedAt22 wrote: ↑Thu Aug 05, 2021 8:26 amAnon_Investor, did you mean not in tax deferred? I thought placing international stock funds in a taxable was optimal peranon_investor wrote: ↑Thu Aug 05, 2021 12:10 amThough not in taxable though due to the loss of the foreign tax credit. Also in a super high tax bracket, all international may be better in tax advantaged accounts. But VT is fine in a tax advantaged account.Noobvestor wrote: ↑Wed Aug 04, 2021 11:57 pm Why diversify less when you could diversify more? Speaking of which, VT is better than either of those ETFs
https://www.bogleheads.org/wiki/Tax-eff ... _placement
Just want to make sure I've got my head on straight. Thanks!
You also have to consider your future marginal tax rates. For someone who is in a high income occupation who will only see their marginal tax rates increase over the next few years, that is something to consider.
Just an FYI a lot of the BH rules of thumb may not apply to everyone's situation, everything is YMMV.
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Re: Your opinions: VTI or VOO?
Thank you all for all your perspectives! Great comments!