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When it comes to two of the largest U.S. stock market funds, one could stand out now that the Federal Reserve decided to cut interest rates
Here's a look at key differences between the Vanguard S&P 500 ETF (NYSE:VOO) and the Vanguard Total Stock Market ETF (NYSE:VTI).
VOO ETF Vs. VTI ETF: The Vanguard S&P 500 ETF tracks the S&P 500 Index and holds around 500 stocks. The ETF is heavily weighted among the Magnificent Seven stocks and large-cap companies.
The Vanguard Total Stock Market ETF tracks the CRSP U.S. Total Market Index and holds 3,656 stocks at the time of writing.
The key difference is that only the VTI holds stocks outside the S&P 500 Index, which gives the ETF a higher weighting of small-cap and mid-cap stocks.
Rate cuts have been a positive for small-cap stocks in the past as it makes financing more affordable to the companies.
Here are the top 10 holdings of the two ETFs as of Aug. 31:
| VOO Top 10 Holdings, Fund Weighting | VTI Top 10 Holdings, Fund Weighting |
| Apple Inc (AAPL): 7.0% | Apple Inc (AAPL): 6.1% |
| Microsoft (MSFT): 6.5% | Microsoft (MSFT): 5.7% |
| NVIDIA (NVDA): 6.2% | NVIDIA (NVDA): 5.1% |
| Amazon.com Inc (AMZN): 3.5% | Amazon.com Inc (AMZN): 3.1% |
| Meta Platforms (META): 2.4% | Meta Platforms (META): 2.1% |
| Alphabet Class A (GOOGL): 2.0% | Alphabet Class A (GOOGL): 1.8% |
| Berkshire Hathaway (BRK.B): 1.8% | Berkshire Hathaway (BRK.B): 1.6% |
| Alphabet Class C (GOOG): 1.7% | Alphabet Class C (GOOG): 1.5% |
| Eli Lilly (LLY): 1.6% | Eli Lilly (LLY): 1.5% |
| Broadcom (AVGO): 1.5% | Broadcom (AVGO): 1.4% |
As investors can see, the top 10 holdings are the same across both funds. The difference is the weighting, with the VOO more heavily concentrated among its top 10 holdings and VTI holding smaller weightings due to the larger amount of overall holdings in the fund.
Each of the two Vanguard ETFs has an expense ratio of 0.03%, which is on the lower side for ETFs and is cheaper than the 0.09% expense rate for the SPDR S&P 500 ETF Trust (NYSE:SPY), which also tracks the S&P 500 ETF Trust and trades similar to VOO.
ETF Performance: Due to their different holdings and tracking methods, the ETFs have turned in different performances over the years.
ETF Performance: With different indexes tracked and holdings, the ETFs have turned in different performances over the years.
Here's a look at the current performances of VOO vs. VTI and how the two ETFs stack up against SPY, which was the first U.S. ETF to ever launch, back in 1993.
| VOO | VTI | SPY | |
| Year-to-Date Return | +19.3% | +18.0% | +19.3% |
| 1-Year Return | +27.2% | +26.2% | 26.9% |
| 5-Year Return | +108.9% | +102.2% | +89.9% |
| 10-Year Return | +237.5% | +219.4% | 234.1% |
The Vanguard S&P 500 ETF has slightly outperformed the SPDR S&P 500 ETF Trust, likely the result of rebalancing timing and asset weighting. The ETF has also outperformed the Vanguard Total Stock Market ETF with large-cap stocks performing better than the overall market index based on the time periods above.
With rate cuts now a top consideration on the minds of investors, the Vanguard Total Stock Market ETF could attract inflows as it captures a higher weight of small cap stocks that could be set for a new leg higher.
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