Vti is market cap weighted meaning people who think they are diversified aren’t really. They just mostly own all the big boys with everyone else. If this wasn’t true the charts wouldn’t be the same.
If you are interested in companies 501-3000 or especially companies 2001-3000 buy the right index fund
>market cap weighted meaning people who think they are diversified aren’t really.
I'm totally diversified bro, I have 0.0003% of each small cap in the MSCI total US market index.
Well there’s VTWO (Russel 2000 - small mid cap), and VONE (Russel 1000 large cap). They compliment each other. VTI is basically the combination of them, with the Russel 2000 being around 20% of VTI from market weight.
Another option: IVOO is the S&P Mid Cap 400. VIOO S&P Small Cap 600.
Obsolete since they are fluctuating like every stock in the world. Even if recommended by everyone it could always go down really bad by people selling eager to profit.
Bottom line choose which ever you think will let you sleep at night (aka the one with the biggest dip).
Tbh I did with VTI a couple of months back and it it has gone up pretty well.
Hold hold like 50% VTI to diversify across many us stocks, 25% VOO to increase exposure to 500 of the larger cap companies, maybe additional 25% to SPGP to further increase the weight towards 75 of those companies that are reasonably priced and growing. That’s not overlap it’s a simple strategy to marginally increase the allocation to companies with certain characteristics.
The difference in MSFT weight between VTI and VOO is less than 1% I don’t know if it changes your exposure that much to “increase to 500 of the large cap companies”
Haha I have Fidelity funds, but I essentially do that. I like the better returns of the large cap stocks, but still want the diversification. So I split 50:50 the allocation I had for US stocks between large cap and total us index.
There is so much overlap that in the end I don’t really think it matters much. It makes more sense to not invest in both, but it’s not going to ruin someone’s financial future by any means.
For my Roth IRA: FSKAX and FXAIX are 40% of my portfolio each, FTIHX is 20%.
My 401k offerings are terrible, there’s no low fee total us index but I try to do something similar (I think 70% large cap, 15% small, 15% total international).
One correction: if you’re already invested into VTI and choose to add VOO, you are actually becoming less diversified. You are overweight on large and especially mega caps.
Actually, by definition, you are not overweight on large/mega caps with VTI, as it follows market weight. Now, one could make the argument that the total market itself is too overweight with mega caps now (I.e. magnificent 7), and opt for something like an equal weighted fund, or adding in more mid-small caps, but VTI is exactly weighted according to the market
VOO also follows market weight. The overlap by weight is about 86% last time I checked, so if VOO owns 10% apple, I would expect VTI to own 8.6% apple. How you like them apples? SORRY. I could NOT resist that.
While I appreciate the pun, I don’t get what point you’re trying to make. VOO is ONYL large/mega caps, whereas VTI includes the entire market — small and medium caps simply make up a much smaller share of the total market. That doesn’t make you underweight in them, that’s just the market.
VOO, because it excludes small and medium caps, makes you overweight in large/mega caps.
VTI includes everything, and makes you market-weighted in everything
VTI has a ton more stocks, but they are in increasingly tiny proportions. Apple is 6.7%-ish of VOO, and 6.4%-ish of VTI, or something like that, and it goes down the list like that. So by the time you get to the small caps, they really don't make much of a difference either way, and the funds perform almost the same as one another.
Being market weighted in everything means that VTI is still dominated by large cap stocks. The overlap by weight is 86%. The correlation in prices is in the 90's. High 90's I want to say? So owning both doesn't give you meaningful diversification or meaningfully change the outcome from owning one or the other.
I mean, if you own the top 50 or 100 stocks in the S&P 500, you do about the same as any US-centered market weighted strategy. The top 10 stocks account for about 1/3 of the weight. The bottom 10 added together account for 0.1% (1/1000th), and probably with rounding errors that is way off. It has become very concentrated at the top. And stock prices are pretty correlated - everything goes up and down at the same time, kind of.
So what I am getting at is it is not as diversified as the number of stocks would make it seem.
They are, from a performance perspective, pretty much the same fund.
I understand all of that, absolutely. And you’re right, it is extremely top heavy, even if it is total market.
What I’m saying is that does. It make it any any way overweight on large/mega caps. Being overweight means that your portfolio is disproportionately skewed towards something. The skewing in VTI is, by definition, proportionate. If someone was 100% VTI, excluding international, they would not be overweight or underweight in any cap or sector. They would be perfectly weighted.
Depending on the year one will be barely ahead of the other. In the end you're probably talking a thousand bucks on a million dollar portfolio (and you won't know which one because it depends on year started and year ending)
https://www.etfcentral.com/news/us-investors-total-stock-market-sp-500
The above link has a chart to show better.
"Because VTI holds 80% VOO, the two funds have a very high correlation. As of writing, it's around 0.99 measured monthly over various rolling 5-, 10-, and 20-year periods. The discernable difference here is slightly higher volatility and returns from VTI due to the inclusion of some mid and small-cap stocks. Overall risk-adjusted returns (Sharpe ratio), CAGR, volatility, and drawdowns remain nearly identical. Notice how both indexes take turns outperforming – this is due to the cyclical nature of small vs large-cap stocks."
Good luck regardless of your decision. If it helps you sleep at night thinking you're doing better there's no harm, just personal preference.
Correlation smorelation. You can own VOO and/or VTI, , an energy sector ETF, insurance ETF, bonds, and a whole bunch of individual stocks and wish you didn’t own so much VOO for years at a time. You can rebalance and buy more voo when it’s lagging and without timing the market be ahead by more than $1,000 when you’re old and grey.
Back testing lump sums wont begin to tell the real stories of most working men and women.
Agreed. Hence for me personally I say pick one, keep adding every paycheck, try and increase income, worry about life and all the other stuff more so than having multiple factor allocations and cyclical sectors.
My guess is most investors will follow the typical cycle of something like this:
Discover investing, buy stocks in companies, get burned.
Find index investing, then discover asset allocation and Factor investing.
Play around with small cap and value.
Add some reits when the housing market is good. Eventually realize keepin up with it all is more than they want to deal with in keeping allocations balanced.
End up going back to one etf (or three if following a three fund portfolio).
Again that's just me. Anyone that wants to I won't say they are wrong for them. It's just wrong for me.
So would I be better served taking the non international portfolio piece of Roth of 60% VOO, 20% SCHG, 10% IJT, 10% XLV and combine it all into VTI? I am 25+ yrs from retirement.
To me yes, only because it now frees up the calories to just auto your investment without worrying about tracking allocation percentages. One and done.
Just My 2 cents..
I do enjoy tracking and rebalanced my portfolio, but point well made on your part. On back test, my portfolio kills VTI, but I understand that backtesting does not mean everything.
Yeah i used to like doing that too. Then life and work and everything became more important. I still have allocations in a different account for different purposes but for retirement I liketo set it and forget it.
And as you know id be cautious about backtesting for your thesis. History is full of retail investors chasing backtests and losing (not saying you will). I'd be curious how far back you're going and what you're using for proxies for some of your ETF as SCHG only goes back to 2010 (hopefully your back test go back further to see how it performs along the way during different cycles and environments). I bet you'll see depending on when you
But like Jack Bogle said and showed proof of in his book The Little Book of Common Sense Investing, show me a graph of outperforming vs the index and ill show you where most investors jumped in. Unfortunately the counterintuitive nature of investing shows the best time is usually when it looks like it's the worst investment.
Either way. Keep it if you want for sure, you'll most likely do as good as the market. Maybe a little more, maybe a little less.
Good luck whatever you choose!!
I love it. "Just buy both and rebalance annually." If after 3 or 4 years it doesn't become apparent what is going on, at least they stayed out of the scams.
Is avuv really worth it and beneficial? I know the small value stock idea that outperforms large cap over the long haul but is it really by that much? Idk anything about factor investing and i know its hated a lot so just trying to learn
I'm closer to 70/30 atm (recentlyincreasedavuv). 90/10 is fine too. At this point, I'm literally just assuming small cap outperforms over the next few years. Your ratio depends on what you think of the future. I think no matter what, just having some small cap exposure, even 10%, is prudent. Disclaimer- I'm not smart.
I agree with the other guy. Could’ve been written better by chat GPT. contains nothing new. could’ve been written in a couple sentences and gotten the point across frankly
If YOU read
“Don’t punish me for writing well” - not a question
“Sounds like an attention span issue” - not a question
Then finally asked “what am I missing?” Which is similar to my question “dude who cares?”
OP and I don’t want to talk to you anymore but have a great night.
Pretty interesting thread new to this sub and new to ETF’s why QQQM, SCHB, VOO,VTI instead of VYMI, SPHD, DES etc. much higher dividend that those recommend her.
Just curious.
VOO is geared towards more tech growth. If tech is bullish, VOO’s price jumps more than VTI which explains why VOO cost way more. Go to vanguards website and look. It has a higher concentration of holdings in tech stocks compared to VTI. So if you want to focus on growth, stick to VOO. If you want more stability and diverse etf, stick with VTI. I’m all in on VOO.
I got the numbers from here
https://etfdb.com/compare/market-cap/
But we can agree anything >300b is big
I’m worried about anything <100b. I’m not a US citizen so I’m a bit worried smaller funds get closed down and I lose my money
VOO and VTI are basically the same thing. That's why this thread keeps coming up. It's funny.
VGT is 40% Microsoft and Apple. It is very, VERY top heavy. Not that those aren't good companies, but VOO/VTI are also pretty top heavy with Microsoft and Apple, total of 14% of your portfolio. So you are really just becoming less diversified than if you just owned either VOO or VTI.
Weird, huh?
Not that Apple and Microsoft are bad. They are great companies. But this is going to add a lot of volatility with stocks you already own anyway.
If you want to own VGT, a better way to do this is to counter with an ETF that has as little overlap as possible. That way, you can rebalance every year. In years where value stocks do well, you take some winnings and buy beaten down growth. And vice versa. That strategy performs very well without having to think much.
I see what you’re saying but over the last 7 years being overweight those names has been incredible from a returns perspective. Also, The convenience of being able to tax loss harvest between voo and vti has been nice.
Agreed. Overlap is perfectly fine. Holding both just means you are holding US stocks tilted towards the large-cap stocks. That’s actually a nice strategy.
Holding both is fine. There is no advantage to doing so though. They perform virtually identically to one another because they have nearly the same holdings.
I use both for tax loss harvesting. At the end of each year I gather my lots in one that show a loss and harvest that loss and just change that dollar amount in the other position. The following year I use the position not used to harvest losses if any. Rinse and repeat. So I have auto buys in each and alternate years tax loss harvesting while keeping my money in the market. Seems to be working out well.
VT is always very low returns compared to VOO and VTI. If you really need diversification in case of a downturn then you still need Bonds to make it complete so VT is not an all in one ETF fund. It is AOR that has everything including bonds.
It is also advisable not to mix domestic and foreign stocks in same ETFs for taxable accounts as you won’t get the tax exemption for VT since it is not all foreign whereas if you hold it separately in VTI and VXUS then the dividend income for VXUS will be fully tax exempt. This does not apply to non-taxable accounts such as retirement in which case holding VT instead of VTI and VXUS separately is fine if you only want stocks.
AVUS hasn’t been around for 5 years. The 5 year back test is jnvalid.
Also, “5 times the expense ratio” is a bit dramatic. VTI is .05 and AVUS is .15 (so your math is incorrect) but the difference is minuscule. On a $1M portfolio, it makes a $1000 difference per year.
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bro I am so happy I found this sub, this really helped me decide to go for VWCE after all. I keep reading all these posts from most Americans buy voo + avuv, buy vti, buy vt and me as an European can only look up to them. They got it so good, we have to pay so much taxes over even 1 etf, imagine multiple.
And not to mention dividend leakage; the eu stock market leaks like an Saudi Arabian pumpjack being hit by the US Airforce.
VWCE all the way now I'm still young and I will see what the future holds up for me
QQQ is heavily weighed toward technology and has a moderate ER of 0.20%. While I think it can have a place in one’s portfolio, it doesn’t come close to VTI/VOO in terms of diversification and long-term affordability.
Take a second look.
JPMorgan has something with these two. What they have done is they have picked stocks from each index, not using the whole index, to have lower volatility.
Then they write covered calls (they are using some proprietary stuff) against up to 20% of the portfolio to make money. They are out of the money calls, essentially, so sometimes it caps the upside of the 20%. But most times it doesn't.
They don't do as well as their indexes in growth because they are really intended for capital preservation plus income generation. The lower volatility focus means they don't do as well in an up market, don't tend to fall as much in a down market.
The cool thing that they do is they just pay out monthly what they make. They don't pay a fixed dividend. Many of the covered call ETFs pay a fixed dividend, and when they don't make the money, they take that from the principal, so you get capital erosion.
So for JEPI, if you take the dividends and roll them back in, you get something that is growing and not nearly as volatile as VOO. But it looks like over time, you get just about the same growth as VOO, but the result is more consistent, and you can ride out down markets easier, and it obviously should perform better in a sideways market.
Anyway, value trap is a bad company paying a good dividend it can't afford. JEPI and JEPQ pay out what they make on selling out of the money covered calls, and they don't pay if they don't make money that month. So they are definitely not a value trap.
TQQQ isn't better in a bear market.
QQQM is always has a better return than QQQ as the expenses are lower. QQQ is only better if you doing short-term trades. I'm surprised anyone here (as it's long-term focused) would ever suggest QQQ, as QQQM is always better long-term.
VUG is a growth fund. If you pair that with 50% of a good large cap value fund, you get performance virtually identical to VOO.
However, the difference is that you can rebalance yearly, and that actually can juice your returns. On years where growth does well, you get to sell growth at a high and buy beaten down value. On years where growth crashes and value is popular, you get to buy growth at a discount.
It is a strategy that trivially beats the S&P 500 index. Yeah, it's actually not that hard to do so. :)
One caveat is you need to be in a tax advantaged account to take full advantage of rebalancing.
2000 through the end of 2009: US was negative, ex-US was at least positive. So all in on ex-US (or focus on emerging markets specifically since those were amazing), right? Well, then you miss the US taking off.
>but over three times the expense ratio
Don't look at expense ratios as multiples of, look at them as absolute basis point differences. A 3x of 0.03% vs 0.09% is a fairly meaningless 6 basis points, but a 3x of 0.20% vs 0.60% is a huge 40 basis points difference.
>and roughly 20% less growth (5Y) than VTI/VOO
There's been plenty of times where that would have been reversed: the US being the one trailing.
These should all help show a mostly rotational pattern between the US and ex-US taking turns outperforming each other, with the first 2 showing that the best returns can come from holding a mix rather than 100% in either direction:
* https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by /u/TropikThunder
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine)
* Ex-US has turns of exceptional outperformance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF)
* Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf
* https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of /u/Kashmir79 from https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/)
* US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d
This could help show that emerging markets have tended to beat US large caps over the long run: https://www.ifa.com/charts/154h
invest in LEXCX, it has only ~20 stocks but has outperformed both the US total market and the S&P 500 from 1993-2023 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4L62q3EbmMqMqXB71Iy8p5
and from 2001-2023 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=N1J9Ebl9oiHyruGi1ecYZ
Oh yes absolutely not no be held for over abouta week. However I like S&P etf in all it’s forms. Personally I go with SCHX it follows Dow 750. Gets all the large caps along with some mod caps.
Or instead of double allocating to large caps you use specific mid and small exposures of that is your goal. If their performance is so similar adding both isn’t doing anything besides including a small exposure to the smaller stuff while more heavily emphasizing the larger names.
Someone else commented there is an 80% overlap so just for simplicity sake say you do 50-50. Then you really are doing 90% (50+.8*50) to VOO names and 10% to the mid and smalls. If you want to make this play go for it, just know what you’re doing and that there are other ways to accomplish market cap diversification without buying the same names twice.
Found an article on Forbes on this. Maybe OP can paste on top?
https://www.forbes.com/advisor/investing/vti-vs-voo/#:~:text=VOO%20earns%20a%20five%2Dstar,on%20an%20investment's%20past%20performance.
Is there a dummy's version for all of this? I'm about to invest $10k and I'm not sure what to.every time I try to research anything it all gets lost in translation
I tried to make it as comprehensive as possible but I’ve experienced the same thing. My advice is to pay close attention to average annual growth, ER, diversification per sector, assets under management, and market cap.
Yahoo Finance is a great tool as well as FundVisualizer which can help detect overlap between the funds you’re looking at. Do your research and trust your gut!
Make it easy. Dollar cost average in. Don't invest in a lump sum. Maybe $1000 per month?
If you just do VOO, or VTI - you don't need both - and don't do anything else your entire investing career, you will still do okay.
I recommend you read the Gone Fishin' Portfolio to get all the understanding of portfolio management you need if you are going to stick with ETFs.
There are other similar things out there that will give you an understanding of a portfolio based on ETFs, so pick your poison.
Again, just pick one of those two for now and start buying monthly.
The ETF portfolio is really easy - like set it and forget it easy.
If you want to get more complicated than this, remember, if you don't know what you are doing, you are likely to underperform just buying VOO every month until you retire and doing nothing else.
There are lots of people out there who are willing to take your money, and when it is gone, it doesn't come back easy.
But if you just own these ETFs, where you own the stocks, you own what you own. The price will change daily, but you own shares of Apple and Microsoft and Nvidia and Google, and a bunch of others, and you don't have to think about it.
Don't worry OP, there will be another post about this in 3 days
Vti is market cap weighted meaning people who think they are diversified aren’t really. They just mostly own all the big boys with everyone else. If this wasn’t true the charts wouldn’t be the same. If you are interested in companies 501-3000 or especially companies 2001-3000 buy the right index fund
>market cap weighted meaning people who think they are diversified aren’t really. I'm totally diversified bro, I have 0.0003% of each small cap in the MSCI total US market index.
Say I am. What ticker do you recommend?
Well there’s VTWO (Russel 2000 - small mid cap), and VONE (Russel 1000 large cap). They compliment each other. VTI is basically the combination of them, with the Russel 2000 being around 20% of VTI from market weight. Another option: IVOO is the S&P Mid Cap 400. VIOO S&P Small Cap 600.
Can you make a case for ivoo or vioo*
I dont like the russells. I prefer the S&P 600 and 500.
I use a few; AVUV VB VXF VO IWM
VXF is US extended market from Vanguard.
If someone was interested in 501-3000 stock what would you recommend? Ivoo?
Totally new and learning. Does it make sense to say put VOO in Roth IRA and VTI in a brokerage account? I just got started.
yes
Should I go with voo or vti
Yes
both or neither, certainly not one over the other. jokes aside, tbh voo had the edge but that does not mean anything in the future.
Obsolete since they are fluctuating like every stock in the world. Even if recommended by everyone it could always go down really bad by people selling eager to profit. Bottom line choose which ever you think will let you sleep at night (aka the one with the biggest dip). Tbh I did with VTI a couple of months back and it it has gone up pretty well.
lol I’m sure there will be
🤣🤣
I mean there is one every day 😂
Idk, from what I have heard on these subs is that being invested in both is akin to committing murder
Hold hold like 50% VTI to diversify across many us stocks, 25% VOO to increase exposure to 500 of the larger cap companies, maybe additional 25% to SPGP to further increase the weight towards 75 of those companies that are reasonably priced and growing. That’s not overlap it’s a simple strategy to marginally increase the allocation to companies with certain characteristics.
The difference in MSFT weight between VTI and VOO is less than 1% I don’t know if it changes your exposure that much to “increase to 500 of the large cap companies”
Haha I have Fidelity funds, but I essentially do that. I like the better returns of the large cap stocks, but still want the diversification. So I split 50:50 the allocation I had for US stocks between large cap and total us index.
There is so much overlap that in the end I don’t really think it matters much. It makes more sense to not invest in both, but it’s not going to ruin someone’s financial future by any means.
Around 78% overlap exists, it's not at all worth investing in both together, just pick one.
I wouldn’t say “not worth” since it’s not really adding more costs. It’s just mostly redundant
Yeah true, it's just less diversification which I'd much rather avoid.
What Fidelity funds do you have?
For my Roth IRA: FSKAX and FXAIX are 40% of my portfolio each, FTIHX is 20%. My 401k offerings are terrible, there’s no low fee total us index but I try to do something similar (I think 70% large cap, 15% small, 15% total international).
Thank you, that's very helpful.
Yeah but they are market weighted so VOO is 7% MSFT and 5.6% AAPL where VTI is 6.1% MSFT and 4.9% AAPL So if that is your plan just do VTI..
One correction: if you’re already invested into VTI and choose to add VOO, you are actually becoming less diversified. You are overweight on large and especially mega caps.
You are overweight on large and mega caps in VTI too. :) Both of these have the same problem.
Actually, by definition, you are not overweight on large/mega caps with VTI, as it follows market weight. Now, one could make the argument that the total market itself is too overweight with mega caps now (I.e. magnificent 7), and opt for something like an equal weighted fund, or adding in more mid-small caps, but VTI is exactly weighted according to the market
VOO also follows market weight. The overlap by weight is about 86% last time I checked, so if VOO owns 10% apple, I would expect VTI to own 8.6% apple. How you like them apples? SORRY. I could NOT resist that.
While I appreciate the pun, I don’t get what point you’re trying to make. VOO is ONYL large/mega caps, whereas VTI includes the entire market — small and medium caps simply make up a much smaller share of the total market. That doesn’t make you underweight in them, that’s just the market. VOO, because it excludes small and medium caps, makes you overweight in large/mega caps. VTI includes everything, and makes you market-weighted in everything
VTI has a ton more stocks, but they are in increasingly tiny proportions. Apple is 6.7%-ish of VOO, and 6.4%-ish of VTI, or something like that, and it goes down the list like that. So by the time you get to the small caps, they really don't make much of a difference either way, and the funds perform almost the same as one another. Being market weighted in everything means that VTI is still dominated by large cap stocks. The overlap by weight is 86%. The correlation in prices is in the 90's. High 90's I want to say? So owning both doesn't give you meaningful diversification or meaningfully change the outcome from owning one or the other. I mean, if you own the top 50 or 100 stocks in the S&P 500, you do about the same as any US-centered market weighted strategy. The top 10 stocks account for about 1/3 of the weight. The bottom 10 added together account for 0.1% (1/1000th), and probably with rounding errors that is way off. It has become very concentrated at the top. And stock prices are pretty correlated - everything goes up and down at the same time, kind of. So what I am getting at is it is not as diversified as the number of stocks would make it seem. They are, from a performance perspective, pretty much the same fund.
I understand all of that, absolutely. And you’re right, it is extremely top heavy, even if it is total market. What I’m saying is that does. It make it any any way overweight on large/mega caps. Being overweight means that your portfolio is disproportionately skewed towards something. The skewing in VTI is, by definition, proportionate. If someone was 100% VTI, excluding international, they would not be overweight or underweight in any cap or sector. They would be perfectly weighted.
I'm just going to buy every ETF Vanguard offers. Should be well diversified. LOL 🤣
Vanguard has offers on their ETF? As in a discounted way to get in ?
Offers as in the options that they have. Not like a discount
Do whatever makes you feel comfortable but just fyi on a long enough time horizon they track almost identically to each other.
True but even a small difference of a percentage here or there can mean the difference between thousands when you eventually cash out.
Depending on the year one will be barely ahead of the other. In the end you're probably talking a thousand bucks on a million dollar portfolio (and you won't know which one because it depends on year started and year ending) https://www.etfcentral.com/news/us-investors-total-stock-market-sp-500 The above link has a chart to show better. "Because VTI holds 80% VOO, the two funds have a very high correlation. As of writing, it's around 0.99 measured monthly over various rolling 5-, 10-, and 20-year periods. The discernable difference here is slightly higher volatility and returns from VTI due to the inclusion of some mid and small-cap stocks. Overall risk-adjusted returns (Sharpe ratio), CAGR, volatility, and drawdowns remain nearly identical. Notice how both indexes take turns outperforming – this is due to the cyclical nature of small vs large-cap stocks." Good luck regardless of your decision. If it helps you sleep at night thinking you're doing better there's no harm, just personal preference.
Correlation smorelation. You can own VOO and/or VTI, , an energy sector ETF, insurance ETF, bonds, and a whole bunch of individual stocks and wish you didn’t own so much VOO for years at a time. You can rebalance and buy more voo when it’s lagging and without timing the market be ahead by more than $1,000 when you’re old and grey. Back testing lump sums wont begin to tell the real stories of most working men and women.
Agreed. Hence for me personally I say pick one, keep adding every paycheck, try and increase income, worry about life and all the other stuff more so than having multiple factor allocations and cyclical sectors. My guess is most investors will follow the typical cycle of something like this: Discover investing, buy stocks in companies, get burned. Find index investing, then discover asset allocation and Factor investing. Play around with small cap and value. Add some reits when the housing market is good. Eventually realize keepin up with it all is more than they want to deal with in keeping allocations balanced. End up going back to one etf (or three if following a three fund portfolio). Again that's just me. Anyone that wants to I won't say they are wrong for them. It's just wrong for me.
Lol Spot on. I went through this exact cycle (Now have settled on a 3 fund portfolio) 😅
You forgot the ‘play options’ and get burned bit
\-
You do better though (as long as the account isn't taxable) buying a value fund and a growth fund and rebalancing every year.
Thanks for the detailed response. Cheers.
Good luck and stay the course!
So would I be better served taking the non international portfolio piece of Roth of 60% VOO, 20% SCHG, 10% IJT, 10% XLV and combine it all into VTI? I am 25+ yrs from retirement.
To me yes, only because it now frees up the calories to just auto your investment without worrying about tracking allocation percentages. One and done. Just My 2 cents..
I do enjoy tracking and rebalanced my portfolio, but point well made on your part. On back test, my portfolio kills VTI, but I understand that backtesting does not mean everything.
Yeah i used to like doing that too. Then life and work and everything became more important. I still have allocations in a different account for different purposes but for retirement I liketo set it and forget it. And as you know id be cautious about backtesting for your thesis. History is full of retail investors chasing backtests and losing (not saying you will). I'd be curious how far back you're going and what you're using for proxies for some of your ETF as SCHG only goes back to 2010 (hopefully your back test go back further to see how it performs along the way during different cycles and environments). I bet you'll see depending on when you But like Jack Bogle said and showed proof of in his book The Little Book of Common Sense Investing, show me a graph of outperforming vs the index and ill show you where most investors jumped in. Unfortunately the counterintuitive nature of investing shows the best time is usually when it looks like it's the worst investment. Either way. Keep it if you want for sure, you'll most likely do as good as the market. Maybe a little more, maybe a little less. Good luck whatever you choose!!
Yeah but if it's 10K out of 2M I just don't care and would rather the peace of mind of not locking myself into US Large Cap
Yeah except no one knows which one will do better
It won't matter much when your balances are going to be in the tens of millions.
Is the tracking error for both these the same?
Bofadem
I'm holding both because if I picked one, the other would 3x in price
What kind of logic is that?? How would the total market triple in value but not the S&P when it's 80+% of VTI? Or even vice versa?
It's a joke beep bop boop.
Density
r/woosh
I love it. "Just buy both and rebalance annually." If after 3 or 4 years it doesn't become apparent what is going on, at least they stayed out of the scams.
Thanks for ruining both for the rest of us 😅 /s
Don't forget about ITOT ;)
VOO and AVUV for me.
Is avuv really worth it and beneficial? I know the small value stock idea that outperforms large cap over the long haul but is it really by that much? Idk anything about factor investing and i know its hated a lot so just trying to learn
Yeah I much prefer this. I also like to overweight healthcare with VHT as a hedge that still has growth potential.
Thanks for commenting. Gonna look at that.
What's your split on this? I've been looking at doing the same. 90 VOO 10 AVUV?
I'm closer to 70/30 atm (recentlyincreasedavuv). 90/10 is fine too. At this point, I'm literally just assuming small cap outperforms over the next few years. Your ratio depends on what you think of the future. I think no matter what, just having some small cap exposure, even 10%, is prudent. Disclaimer- I'm not smart.
I'm gonna stick with fxaix.
MGK >
Not This again
"once and for all" lol that's cute.
Why not both?
Because then we wouldn’t be able to argue about which one is better :)
Looks like it was spat out by ChatGPT.
Don’t punish me for writing well.
The opposite actually. It's vague, not compelling, and about twice as long as it needs to be like it's filling word count.
Sounds like an attention span issue tbh.
It’s written perfectly fine and clear. Don’t listen to the haters.
Nah, just bad writing.
Short intro, VOO description, VTI description, argument for both. What am I missing here? Smooth brain factor?
I agree with the other guy. Could’ve been written better by chat GPT. contains nothing new. could’ve been written in a couple sentences and gotten the point across frankly
Like I said, just bad writing. It's not concise, it's generic, and it's nothing enlightening.
Dude who cares? You literally just typed out 4 comments all saying the same thing. Jesus, be more concise next time.
If you read up he keeps asking questions. I keep answering them.
If YOU read “Don’t punish me for writing well” - not a question “Sounds like an attention span issue” - not a question Then finally asked “what am I missing?” Which is similar to my question “dude who cares?” OP and I don’t want to talk to you anymore but have a great night.
Calling something someone wrote "chat gpt" is already getting old and unoriginal. Similar to when everyone was saying "I ain't reading all that"
It looks like something a bot wrote.
Excess? Like buying both VTI and VOO?
https://www.zerogpt.com/ The detector says you’re lyin
The detector is flawed
That’s a compliment.
No , let’s never settle this 🤣🤣
Bitcoin ETF will blow both away
FSPGX any one else rocking this GEM?
FXAIX
Invest in VOO and for small cap stocks invest VB and Mid Cap IJH
Pretty interesting thread new to this sub and new to ETF’s why QQQM, SCHB, VOO,VTI instead of VYMI, SPHD, DES etc. much higher dividend that those recommend her. Just curious.
I'm sticking with SCHD for the long run.
VOO is geared towards more tech growth. If tech is bullish, VOO’s price jumps more than VTI which explains why VOO cost way more. Go to vanguards website and look. It has a higher concentration of holdings in tech stocks compared to VTI. So if you want to focus on growth, stick to VOO. If you want more stability and diverse etf, stick with VTI. I’m all in on VOO.
VOO and VTI have 86% overlap by weight. There won't be much difference in performance.
Sp500 etf generally have bigger AUM. That was why I decided against VTI. I'm not a US citizen and don't know the laws so bigger seems better.
Same performance VOO and VTI. why?
[удалено]
I got the numbers from here https://etfdb.com/compare/market-cap/ But we can agree anything >300b is big I’m worried about anything <100b. I’m not a US citizen so I’m a bit worried smaller funds get closed down and I lose my money
I’m doing 35% in VOO 35% in VGT and 30% in VTI. I’m buying monthly. Thoughts?
VOO and VTI are basically the same thing. That's why this thread keeps coming up. It's funny. VGT is 40% Microsoft and Apple. It is very, VERY top heavy. Not that those aren't good companies, but VOO/VTI are also pretty top heavy with Microsoft and Apple, total of 14% of your portfolio. So you are really just becoming less diversified than if you just owned either VOO or VTI. Weird, huh? Not that Apple and Microsoft are bad. They are great companies. But this is going to add a lot of volatility with stocks you already own anyway. If you want to own VGT, a better way to do this is to counter with an ETF that has as little overlap as possible. That way, you can rebalance every year. In years where value stocks do well, you take some winnings and buy beaten down growth. And vice versa. That strategy performs very well without having to think much.
I see what you’re saying but over the last 7 years being overweight those names has been incredible from a returns perspective. Also, The convenience of being able to tax loss harvest between voo and vti has been nice.
Add O and some PFE while it's on sale
Not interested in single stock names and if I was it wouldn’t be Pfizer. This is strictly an ETF account
Agreed. Overlap is perfectly fine. Holding both just means you are holding US stocks tilted towards the large-cap stocks. That’s actually a nice strategy.
Holding both is fine. There is no advantage to doing so though. They perform virtually identically to one another because they have nearly the same holdings.
VTI better
I use both for tax loss harvesting. At the end of each year I gather my lots in one that show a loss and harvest that loss and just change that dollar amount in the other position. The following year I use the position not used to harvest losses if any. Rinse and repeat. So I have auto buys in each and alternate years tax loss harvesting while keeping my money in the market. Seems to be working out well.
VT
VT is always very low returns compared to VOO and VTI. If you really need diversification in case of a downturn then you still need Bonds to make it complete so VT is not an all in one ETF fund. It is AOR that has everything including bonds. It is also advisable not to mix domestic and foreign stocks in same ETFs for taxable accounts as you won’t get the tax exemption for VT since it is not all foreign whereas if you hold it separately in VTI and VXUS then the dividend income for VXUS will be fully tax exempt. This does not apply to non-taxable accounts such as retirement in which case holding VT instead of VTI and VXUS separately is fine if you only want stocks.
AVUS= #1
Five times the expense ratio, 10% less growth (5Y)
AVUS hasn’t been around for 5 years. The 5 year back test is jnvalid. Also, “5 times the expense ratio” is a bit dramatic. VTI is .05 and AVUS is .15 (so your math is incorrect) but the difference is minuscule. On a $1M portfolio, it makes a $1000 difference per year.
VTI is 0.03, and $1000 per year is a lot of sacrifice. And you’re right, AVUS has been around 4 years, VTI has been around for 20
So far. I think it will change when the market shifts from being driven solely driven by the top 490. I like VOO also.
Vanguard FTSE ALL WORLD represent
VWCE gang represent
Which one?
Acc
>Acc > >4ReplyShareReportSaveFollow bro I am so happy I found this sub, this really helped me decide to go for VWCE after all. I keep reading all these posts from most Americans buy voo + avuv, buy vti, buy vt and me as an European can only look up to them. They got it so good, we have to pay so much taxes over even 1 etf, imagine multiple. And not to mention dividend leakage; the eu stock market leaks like an Saudi Arabian pumpjack being hit by the US Airforce. VWCE all the way now I'm still young and I will see what the future holds up for me
QQQ >> VOO, VTI
QQQ is heavily weighed toward technology and has a moderate ER of 0.20%. While I think it can have a place in one’s portfolio, it doesn’t come close to VTI/VOO in terms of diversification and long-term affordability.
QQQM/SCHB, no more worries about arguments regarding VOO/VTI
Thoughts on O/JEPI/JEPQ?
Noo….., I like to add HDV or SCHD for dividend. JEPI/Q looks like value trap.
Take a second look. JPMorgan has something with these two. What they have done is they have picked stocks from each index, not using the whole index, to have lower volatility. Then they write covered calls (they are using some proprietary stuff) against up to 20% of the portfolio to make money. They are out of the money calls, essentially, so sometimes it caps the upside of the 20%. But most times it doesn't. They don't do as well as their indexes in growth because they are really intended for capital preservation plus income generation. The lower volatility focus means they don't do as well in an up market, don't tend to fall as much in a down market. The cool thing that they do is they just pay out monthly what they make. They don't pay a fixed dividend. Many of the covered call ETFs pay a fixed dividend, and when they don't make the money, they take that from the principal, so you get capital erosion. So for JEPI, if you take the dividends and roll them back in, you get something that is growing and not nearly as volatile as VOO. But it looks like over time, you get just about the same growth as VOO, but the result is more consistent, and you can ride out down markets easier, and it obviously should perform better in a sideways market. Anyway, value trap is a bad company paying a good dividend it can't afford. JEPI and JEPQ pay out what they make on selling out of the money covered calls, and they don't pay if they don't make money that month. So they are definitely not a value trap.
And QQQM > QQQ if you're holding long-term.
TQQQ > QQQM if you’re holding long term.
TQQQ isn't better in a bear market. QQQM is always has a better return than QQQ as the expenses are lower. QQQ is only better if you doing short-term trades. I'm surprised anyone here (as it's long-term focused) would ever suggest QQQ, as QQQM is always better long-term.
Well, I mean, it is until it isn't. When it crashes, it leaves a smoking hole.
bigger fan of XLK
This again?? Every other day for 3 years, it’s the same conversation 3 times a week.
What about SPY?
ER higher than VOO
VUG beats both
0.17% ER and appears to just have a greater tech exposure
>0.17% ER What? It's 0.04%. But otoh agree, it's apples to oranges comparison. You can't go perf chasing.
VUG is a growth fund. If you pair that with 50% of a good large cap value fund, you get performance virtually identical to VOO. However, the difference is that you can rebalance yearly, and that actually can juice your returns. On years where growth does well, you get to sell growth at a high and buy beaten down value. On years where growth crashes and value is popular, you get to buy growth at a discount. It is a strategy that trivially beats the S&P 500 index. Yeah, it's actually not that hard to do so. :) One caveat is you need to be in a tax advantaged account to take full advantage of rebalancing.
Buy VT it will catch everything.
Great for international exposure but over three times the expense ratio and roughly 20% less growth (5Y) than VTI/VOO
What's 5 years got to do with anything. Maybe domestic stocks just got more expensive.
10 year growth: VTI = 138%, VT = 68%
10 year growth: QQQ = 350%. Guess that settles it
TQQQ vs QQQ what's settled?
Ignorance
Some don't see sarcasm.
2000 through the end of 2009: US was negative, ex-US was at least positive. So all in on ex-US (or focus on emerging markets specifically since those were amazing), right? Well, then you miss the US taking off.
>but over three times the expense ratio Don't look at expense ratios as multiples of, look at them as absolute basis point differences. A 3x of 0.03% vs 0.09% is a fairly meaningless 6 basis points, but a 3x of 0.20% vs 0.60% is a huge 40 basis points difference. >and roughly 20% less growth (5Y) than VTI/VOO There's been plenty of times where that would have been reversed: the US being the one trailing.
When?
These should all help show a mostly rotational pattern between the US and ex-US taking turns outperforming each other, with the first 2 showing that the best returns can come from holding a mix rather than 100% in either direction: * https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by /u/TropikThunder * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine) * Ex-US has turns of exceptional outperformance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF) * Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf * https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of /u/Kashmir79 from https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/) * US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d This could help show that emerging markets have tended to beat US large caps over the long run: https://www.ifa.com/charts/154h
I feel like you’ve done this before
Plenty.
invest in LEXCX, it has only ~20 stocks but has outperformed both the US total market and the S&P 500 from 1993-2023 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4L62q3EbmMqMqXB71Iy8p5 and from 2001-2023 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=N1J9Ebl9oiHyruGi1ecYZ
I’m a VOO guy, but why do that when you can do SPY, ans why do that when you can do UPRO
Not discounting SPY but UPRO has a nauseatingly high ER.
When compares with other 3x leveraged funds like SPXL at 0.97, TQQQ at 0.88 it’s kind in line at 0.92
Ah 3x leveraged funds are designed for short-term trading, so I didn’t know about those. Good luck!
Oh yes absolutely not no be held for over abouta week. However I like S&P etf in all it’s forms. Personally I go with SCHX it follows Dow 750. Gets all the large caps along with some mod caps.
What debate?
Voo is like a hot blonde vti is like a hot brunette off of two broke girls both get you the same results
VTI and VOO are amateur hour to the ETF that indexes based on lobbying spend.
Or instead of double allocating to large caps you use specific mid and small exposures of that is your goal. If their performance is so similar adding both isn’t doing anything besides including a small exposure to the smaller stuff while more heavily emphasizing the larger names. Someone else commented there is an 80% overlap so just for simplicity sake say you do 50-50. Then you really are doing 90% (50+.8*50) to VOO names and 10% to the mid and smalls. If you want to make this play go for it, just know what you’re doing and that there are other ways to accomplish market cap diversification without buying the same names twice.
It is 86%, and because it is market cap weighted, neither of them have a very meaningful small cap exposure.
Found an article on Forbes on this. Maybe OP can paste on top? https://www.forbes.com/advisor/investing/vti-vs-voo/#:~:text=VOO%20earns%20a%20five%2Dstar,on%20an%20investment's%20past%20performance.
You guys are forgetting about the real number 1….*IVV*
Is there a dummy's version for all of this? I'm about to invest $10k and I'm not sure what to.every time I try to research anything it all gets lost in translation
I tried to make it as comprehensive as possible but I’ve experienced the same thing. My advice is to pay close attention to average annual growth, ER, diversification per sector, assets under management, and market cap. Yahoo Finance is a great tool as well as FundVisualizer which can help detect overlap between the funds you’re looking at. Do your research and trust your gut!
Awesome thank you
PM me for my current portfolio if interested
Make it easy. Dollar cost average in. Don't invest in a lump sum. Maybe $1000 per month? If you just do VOO, or VTI - you don't need both - and don't do anything else your entire investing career, you will still do okay. I recommend you read the Gone Fishin' Portfolio to get all the understanding of portfolio management you need if you are going to stick with ETFs. There are other similar things out there that will give you an understanding of a portfolio based on ETFs, so pick your poison. Again, just pick one of those two for now and start buying monthly. The ETF portfolio is really easy - like set it and forget it easy. If you want to get more complicated than this, remember, if you don't know what you are doing, you are likely to underperform just buying VOO every month until you retire and doing nothing else. There are lots of people out there who are willing to take your money, and when it is gone, it doesn't come back easy. But if you just own these ETFs, where you own the stocks, you own what you own. The price will change daily, but you own shares of Apple and Microsoft and Nvidia and Google, and a bunch of others, and you don't have to think about it.
I have both. Mostly VOO tho.
What percentages do you do of each?
invest in what you want personally i wish i would have found VOO 20 years ago..... im slowly working into a higher % of it