Do you want to know which investment option is right for you? In this VOO vs. VTSAX article, we will explore the various features of these two options and what will fit your situation best.
The Vanguard ETF VOO and the mutual fund VTSAX are two of the most popular investment options among long-term investors. These products are most suitable for you if you want a quick and easy method for having exposure to the entire US equity market while keeping costs as low as possible.
The two products are similar, but there are some significant differences. The primary difference is that VOO is a passively managed Exchange-Traded Fund (ETF) that tracks the S&P 500 and is cost-efficient. In contrast, VTSAX, one of the largest US-based mutual funds tracking the CRSP US Total Market Index, is a passively managed mutual fund.
Get to know these two investment choices and find out which one is more suitable for you.
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VOO: Vanguard 500 Index Fund ETF
VOO (Vanguard 500 Index Fund ETF) is an ETF offered by the Vanguard Group, which tracks the S&P 500 Index. The Standard and Poor’s 500 represents the largest 500 publicly-traded US-based companies. VOO has around 508 stocks and net assets amounting to around $620 billion.
Vanguard states that VOO is intended to closely track the returns of the S&P 500, a stock market index measuring the overall returns of the US stocks. Therefore, VOO is considered a diverse fund, having stocks from various sectors. VOO has a yield of 1.55% and does not have any fractional shares.
85% of the total portfolio of VOO is composed of large-cap names (companies with large market capitalization), while the rest of the portfolio consists of mid-cap names.
As it is one of the most cost-efficient ETFs, VOO has an expense ratio of 0.03%.
Established in 2000, VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares) tracks the CRSP US Total Market Index. VTSAX exposes investors to the entire US equity market, including all the small, mid, and large-cap companies.
While VTSAX’s net assets amount to up to $1 trillion, it has limited exposure to international markets.
There are many overlaps in the portfolio composition of VOO and VTSAX, with a heavy orientation towards mega and large caps. However, the VTSAX portfolio also has mid-, small-, and micro-cap names. These constitute around 28% of its total portfolio.
VTSAX is characterized by low cost with an expense ratio of 0.04%.
Its other primary attributes include tax efficiency and a broadly diversified portfolio. VTSAX holds around 3,586 stocks, and it requires an initial minimum investment of $3,000. It has a yield of 1.32%.
VOO Vs. VTSAX: Key Differences
From the above overview of the main features of the VOO and VTSAX, we see that both are low-cost funds by the Vanguard Group. Some of the key differences between the two investment funds are given below.
- VOO is an ETF, while VTSAX is a mutual index fund. So, while VOO is traded throughout the day, similar to a stock, VTSAX is traded at the end of the day.
- VOO follows the S&P 500 Index, while VTSAX tracks the CRSP US Total Market Index.
- VTSAX requires a $3,000 minimum investment, whereas VOO does not require an initial investment.
- VOO has a yield of 1.55%, while VTSAX has 1.32%.
- While both are low-cost, the expense ratio of VOO is 0.03%, and that of VTSAX is 0.04%.
- The median market cap for VOO is around $200 billion, while for VTSAX, it is $128 billion, almost 35% less than VOO.
VOO Vs. VTSAX: Composition Differences
Since VOO tracks the S&P 500 Index, its portfolio is smaller than VTSAX. Where VOO has around 500 stocks, VTSAX offers exposure to more than 3,500 stocks.
As discussed earlier, VOO is majorly oriented toward mega and large-cap names, constituting around 85% of its total portfolio. The remaining 15% consists of medium-cap names.
We also discussed that VTSAX’s portfolio is broader, with around 72% of the total portfolio consisting of mega and large-caps, while the remaining 28% consists of medium, small, and micro-cap names.
Here is a portfolio breakdown of VOO and VTSAX by the market-cap
| Market-cap | VOO | VTSAX |
| Mega-cap | 50.9% | 41.6% |
| Large-cap | 33.9% | 30.5% |
| Mid-cap | 15.0% | 19.4% |
| Small-cap | 0.1% | 6.3% |
| Micro-cap | 0.0% | 2.3% |
The top ten holdings in the VOO portfolio constitute around 30.40% of the total net assets, while for VTSAX, the top ten holdings constitute around 25.20% of the total net assets.
VOO Top 10 Holdings:
| Asset | Percentage |
| Apple Inc. | 6.90% |
| Microsoft Corp | 6.00% |
| Alphabet Inc | 4.20% |
| Amazon.com Inc. | 3.60% |
| Tesla Inc. | 1.90% |
| NVIDIA Corp. | 1.60% |
| Berkshire Hathaway Inc. | 1.60% |
| Meta Platforms Inc. | 1.30% |
| United Health Group Inc. | 1.20% |
| Johnson & Johnson | 1.20% |
VTSAX Top 10 Holdings:
| Asset | Percentage |
| Apple Inc. | 5.80% |
| Microsoft Corp | 5.10% |
| Alphabet Inc | 3.50% |
| Amazon.com Inc. | 3.00% |
| Tesla Inc. | 1.60% |
| NVIDIA Corp. | 1.30% |
| Berkshire Hathaway Inc | 1.30% |
| Meta Platforms Inc. | 1.10% |
| United Health Group | 1.00% |
| Johnson & Johnson | 1.00% |
As you can see, the major holdings for both the funds are the same, but the percentage composition is different.
Despite the similarities, you may find significant differences if you look at the portfolio breakup by sector.
Here is a tabular breakdown of the two funds’ portfolios by sector.
| Sector | VOO | VTSAX |
| Communication services | 11% | 3% |
| Consumer discretionary | 12% | 16% |
| Consumer staples | 6% | 5% |
| Energy | 3% | 3% |
| Financial | 11% | 12% |
| Healthcare | 13% | 13% |
| Industrial | 8% | 13% |
| IT | 28% | 28% |
| Materials | 3% | 2% |
| Real Estate | 3% | 4% |
| Utility | 2% | 3% |
As you can see VOO portfolio comprises a higher percentage of communication services than VTSAX. In contrast, VTSAX offers greater exposure to consumer discretionary services and the industrial sector.
VOO Vs. VTSAX: Performance Differences
According to the Vanguard Group, VOO and VTSAX offer similar risk levels at similar costs and have offered similar returns during the past five years. Even though there are differences between the two funds regarding their nature and composition, total market funds like VTSAX entail not only the large-cap blue-chip US companies but also the mid-cap and small-cap stocks. Middle and small-sized companies are generally considered riskier, despite having more potential to grow and offer returns.
Here is a performance comparison of the two funds in terms of annual returns.
VTSAX Performance & Returns:
| Returns | Percentage |
| YTD Returns | 25.71% |
| 1-Month Return | 3.25% |
| 3-Months Return | -5.46% |
| 1-Year Return | 11.67% |
| 3-Year Return | 18.15% |
| 5-Year Return | 15.36% |
| 10-Year Return | 14.24% |
VOO Performance & Returns:
| Returns | Percentage |
| YTD Returns | -6.31% |
| 1-Month Return | -3.91% |
| 3-Months Return | -4.49% |
| 1-Year Return | 15.67% |
| 3-Year Return | 18.93% |
| 5-Year Return | 15.98% |
| 10-Year Return | 14.61% |
| Year | VTSAX Annual Return | VOO Annual Return |
| 2011 | 1% | 2% |
| 2012 | 16% | 16% |
| 2013 | 34% | 32% |
| 2014 | 13% | 14% |
| 2015 | 0% | 1% |
| 2016 | 13% | 12% |
| 2017 | 21% | 22% |
| 2018 | -5% | -4% |
| 2019 | 31% | 31% |
| 2020 | 21% | 18% |
| 2021 till date | 26% | 27% |
The table above shows that the performance of the VOO and VTSAX has been somewhat similar during the past ten years. However, VOO has slightly outperformed VTSAX.
Additionally, while VTSAX offers more diversification as it holds more than seven times more stocks than VOO, it is more volatile as the portfolio includes more small and micro-cap stocks.
We need to remember that while the performance of VOO has been slightly better during the past decade, it does not guarantee that the coming years will follow a similar trend.
VOO Vs. VTSAX: Fees
VOO and VTSAX are considered among the lowest cost funds on the market. VTSAX comes at a slightly higher expense ratio of 0.04%, while the expense ratio of VOO is 0.03%.
The slightly higher expense ratio of VTSAX is because it has more administrative costs. After all, it is a mutual fund. Additionally, since it comprises more than 3500 stocks, managing such a huge number of stocks also comes at a certain cost.
While the difference of 0.01% between the VTSAX and VOO expense ratio can have a significant impact, in the long run, the fees for both funds are very low compared to the market.
Therefore, if we were to consider where to invest, it would depend on individual preference.
If you want exposure to small-cap securities and incur the benefits of automated investment, then VTSAX is a better option. However, if you want to invest in the top 500 companies of the US and are considering the last ten-year return record only, then VOO may be more suitable.
Frequently Asked Questions – VOO Vs. VTSAX
Which Is Better: VOO Or VTSAX?
If we compare the performance of the two funds during the past ten years, VOO has marginally outperformed VTSAX, and it tracks the S&P 500. However, VTSAX offers broader exposure and is more diverse. So, some may consider VTSAX to be a better option.
Why Is VTSAX So Good?
VTSAX is a low-cost mutual fund offering a diverse portfolio.
Moreover, it is tax-efficient, and unlike VOO, it offers fractional shares as well.
What Is Better Than VTSAX?
VTSAX or Vanguard Total Stock Market Index Admiral Shares is considered one of the best low-cost and tax-efficient index funds available.
Is VTSAX A Mutual Fund?
Unlike VOO, an ETF, VTSAX is a mutual fund that tracks the CRSP US Total Market Index.
Does VTSAX Pay Dividend?
Yes, VTSAX pays a dividend. As of the current year, VTSAX has a dividend yield of 1.32%.
VOO Vs. VTSAX: Which One Is Right For Me?
Both funds offer distinct features that will appeal to different types of investors.
If you prefer a diversified portfolio and are partial to risk-taking for possibly bigger returns, you may want to go for VTSAX. If you find more satisfaction and peace of mind in a fund’s successful past performance and the security of large-cap, blue-chip companies, VOO is the way to go.
Whichever option you choose in this VOO vs. VTSAX showdown, continue to learn more about your investment and be updated about industry and stock market news to make an informed decision. May you be well on your way to the road to financial independence!
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Marjolein is a financial consultant who has built over €4,000 monthly passive income and saves over 70% of her income. Read Radicals’ inspiring story, from stuck in the 9-to-5 to loving life. Feel free to send Radical a message at the bottom of this page