If you’re researching the best ETFs for your portfolio, you may have come across the popular VT and VTI etfs offered by Vanguard.
Although their names and tickers look very similar, you should note that they are two different funds with different investment objectives. The key difference between VT and VTI is that VT offers exposure to a globally diversified portfolio while the VTI offers exposure to the entire US market.
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Here, we explore all the differences between VT and VTI and why you should not confuse these two ETFs when investing!
P.s. If you’re exploring World ETFs instead, I’ve covered the differences between VT and ACWI previously.
VT vs VTI
| VT | VTI | |
|---|---|---|
| Name | Vanguard Total World Stock Index Fund ETF | Vanguard Total Stock Market ETF |
| Underlying Index | FTSE Global All Cap Index | CRSP US Total Market Index |
| Investment Objective | Gives you exposure to large, mid, and small-cap stocks from developed and emerging markets across the world. | Gives you exposure to large, mid, small, and micro-cap stocks in the US markets only. |
| Expense Ratio | 0.08% | 0.03% |
| AUM (USD) | $46.1 B | $1.5 T |
| No. of Holdings | 9826 | 3731 |
| Inception Date | 24 June 2008 | 24 May 2001 |
| Fund Manager | Vanguard | Vanguard |
| Dividend Yield | 2.06% | 1.03% |
| Geographical Diversification | Global | US |
VT vs VTI – Differences
Underlying Index
This is the key difference between VT and VTI.
The Vanguard Total World Stock ETF (VT) tracks the FTSE Global All Cap Index while the Vanguard Total Stock Market ETF (VTI) tracks the CRSP US Total Market Index.
What is the FTSE Global All Cap Index?
The FTSE Global All Cap Index is a market cap weighted index that follows the performance of large, mid and small cap stocks listed across developed and emerging markets across the world.
As of Mar 2024, here’re the key characteristics:
The FTSE Global All Cap Index has 10,065 constituents across 49 countries.
What is the CRSP US Total Market Index?
The CRSP US Total Market Index is a market cap weighted index that tracks mega, large, small and micro cap stocks listed across the US markets. At the point of writing, it follows 3,659 constituents across 11 sectors:
Investors who are looking for global diversification and exposure to international markets may consider the Vanguard Total World Stock ETF (VT) over the Vanguard Total Stock Market ETF (VTI).
Those looking for exposure to the US market can consider the VTI. Compared to other US market ETFs like the SPY or QQQ, VTI offers a broader diversification across the US market for a relatively low fee.
(p.s. if you’re looking for ETFs that invest track the S&P500 index, read this instead)
Building on this point, let’s take a look at their:
Geographical Diversification
The image above explains it all. VT is a World ETF that gives you exposure to companies listed across the world while VTI offers exposure only to the US market.
Historical Performance
The differences in their portfolio composition would naturally affect the performance of VT and VTI. Historically, VTI (green) has outperformed VT (orange):
Here’s a quick overview of their historical performance. Since the US markets did well in recent years (at least pre-Covid), we see higher returns from VTI over the periods of 5- and 10- years.
| 1-yr | 3-yr | 5-yr | 10-yr | |
| VT | 22.75% | 6.59% | 10.95% | 8.77% |
| VTI | 29.37% | 9.62% | 14.25% | 12.27% |
Expense ratio
Another major difference between the VT and VTI is their cost. The Expense Ratio for Vanguard Total World Stock ETF (VT) is 0.08% while Vanguard Total Stock Market ETF (VTI)’ tracks the CRSP US Total Market Index’s expense ratio is 0.03%.
Given the difference in their geographical diversification, it makes more sense for VT to be slightly more costly than VTI.
That said, you should know that their investment objectives are vastly different, hence the expense ratio shouldn’t be a key consideration in this case.
VT vs VTI – Similarities
Top Holdings
While their underlying indices vary, you will notice that their top holdings are the same:
| Holding | VT | VTI |
| Microsoft Corp. (MSFT) | 3.85 % | 6.21 % |
| Apple Inc. (AAPL) | 6.21 % | 5.39 % |
| NVIDIA Corp. (NVDA) | 2.35 % | 3.75 % |
| Amazon.com Inc. (AMZN) | 1.99 % | 3.32 % |
| Facebook Inc (META) | 1.36 % | 2.20 % |
| Alphabet Inc. Class A (GOOGL) | 1.04 % | 1.65 % |
| Alphabet Inc. Class C (GOOG) | 0.86 % | 1.37 % |
| Eli Lilly (LLY) | 0.80 % | 1.30 % |
| Berkshire Hathaway Inc. Class B (BRK.B) | 0.79 % | 1.47 % |
| Broadcom (AVGO) | 0.70 % | 1.17 % |
Low Cost, Good Liquidity ETFs
Both VT and VTI are low cost index ETFs that are popular and hence enjoy good liquidity.
They tend to have tracked their indices well too; both VT’s and VTI’s tracking error is 0.02% over the past 12 months.
VT or VTI – which should you include in your portfolio?
As mentioned above, the main difference between VT and VTI is that VT offers a wider geographical diversification.
Over the past 10 years, VTI has outperformed the VT. However, this outperformance is due to the better performance of the US markets in the recent decade (#thanksQE).
Here’s a study from the Index Fund Advisors that shows the performance of the global markets vs US markets across the past 50 years:
Therefore, if you were to invest in VTI, you should also consider holding ETFs that offer exposure to international markets. This will allow you to build a balanced portfolio that can weather the storms should the US market turn bearish in the next decade.
