The Vanguard Total Stock Market ETF (NYSEMKT:VTI) and the Vanguard Value ETF (NYSEMKT:VTV) are two prominent investment choices offered by Vanguard, each catering to different investment strategies. While VTI aims to provide comprehensive exposure to the U.S. stock market by including a diverse range of large-, mid-, and small-cap stocks, VTV focuses specifically on large-cap value stocks, primarily in the financials and healthcare sectors.
A comparison of their performance reveals that VTI has delivered higher returns over both one-year (15.53%) and five-year periods compared to VTV (13.32%), yet it has also faced steeper drawdowns, with VTI experiencing a maximum decline of 25.37% over five years, compared to 17.03% for VTV. Both ETFs boast low expense ratios, with VTI at 0.03% and VTV slightly higher at 0.04%. A notable advantage for VTV is its nearly double dividend yield of 2.05%, which makes it particularly appealing for income-focused investors.
VTI’s portfolio includes over 3,500 stocks, heavily weighted towards the technology sector, which accounts for 35% of its total assets. Major holdings include renowned firms like Apple, Nvidia, and Microsoft, reflecting robust growth potential. In contrast, VTV is more concentrated with around 315 holdings, focusing on established companies such as JPMorgan Chase, Berkshire Hathaway, and Johnson & Johnson. This concentration on value stocks helps explain VTV’s lower beta and higher yield.
Ultimately, the choice between VTI and VTV may depend on an investor’s individual goals. VTI offers broad diversification across the market, making it suitable for those seeking overall market exposure. Conversely, VTV is designed for investors interested in capitalizing on value opportunities within large-cap stocks.
In summary, both ETFs present distinct advantages and can be valuable components in carefully constructed investment portfolios, depending on the investor’s risk tolerance and investment strategy.