.webp)
For long-term investors seeking broad exposure to the U.S. equity market, the Vanguard Total Stock Market ETF (VTI) has long been a go-to choice. Designed to track the entire investable universe of American stocks—from mega-cap giants to small-cap startups—VTI offers unmatched diversification. But over the past decade, that breadth has come at a cost: performance.
From 2015 to 2025, a $1,000 investment in VTI would have grown to approximately $3,870, while the same investment in the Vanguard S&P 500 ETF (VOO) would now be worth around $4,100. The difference may seem modest, but it reflects a deeper trend: the underperformance of mid- and small-cap stocks relative to their large-cap counterparts.
The S&P 500, which VOO tracks, is composed of 500 of the largest and most profitable U.S. companies. These firms—like Apple, Microsoft, and Nvidia—have dominated market returns in recent years, especially during the tech-led rally of 2023–2025. VTI, by contrast, includes thousands of stocks, many of which are smaller and more volatile. While this broader exposure can offer upside during periods of economic expansion, it also introduces risk and drag during downturns.
One of the key factors behind VTI’s lagging performance is the weighting structure. Both VTI and VOO are market-cap weighted, meaning larger companies still dominate the portfolio. However, VTI’s inclusion of smaller firms dilutes the impact of top performers. In years when small-caps struggle—such as during inflationary periods or rate hikes—VTI tends to underperform.
Another consideration is sector concentration. The S&P 500 has a heavier tilt toward technology, healthcare, and consumer discretionary stocks, which have outpaced other sectors. VTI, with its broader scope, includes more exposure to financials, industrials, and energy—sectors that have faced headwinds in recent years.
Despite the performance gap, VTI remains a popular choice for investors seeking long-term growth with minimal management fees. Its expense ratio of 0.03% matches that of VOO, and its quarterly dividend payouts offer steady income. For those who value diversification and want exposure to the full spectrum of U.S. equities, VTI still holds appeal.
Financial advisors often recommend a blend of both ETFs to balance growth and stability. By combining VTI’s broad reach with VOO’s large-cap strength, investors can create a portfolio that captures the best of both worlds—while smoothing out volatility over time.
As markets evolve and small-cap stocks regain momentum, VTI may yet close the gap. But for now, the numbers tell a clear story: in the race for returns, the S&P 500 has taken the lead