Head to Head: VIG vs VTI (Which ETF is the Better?)
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As an investor, I’m always looking for ways to maximize my returns while minimizing risks.
That’s why I’m interested in comparing two popular exchange-traded funds (ETFs), Vanguard Dividend Appreciation ETF (VIG) and Vanguard Total Stock Market ETF (VTI).
Both are offered by Vanguard, a well-known and respected investment firm.
Before diving into the details of the comparison, it’s important to understand what each ETF is and what it offers.
VIG vs VTI: VIG is an ETF that focuses on dividend-paying stocks. It seeks to track the performance of the NASDAQ US Dividend Achievers Select Index, which includes companies that have a history of increasing their dividends every year for at least 10 years.
On the other hand, VTI is an ETF that provides exposure to the entire U.S. equity market, including small-, mid-, and large-cap stocks. It seeks to track the performance of the CRSP US Total Market Index.
Now that we have a basic understanding of what each ETF is, let’s dive into the head-to-head comparison.
We’ll look at various metrics, such as fees, performance, dividend yield, holdings, and technical indicators, to determine which ETF is the better investment option.
By the end of this comparison, we’ll have a better idea of which ETF is more suitable for our investment goals and risk tolerance.
Table of Contents
VIG vs VTI Overview
When it comes to investing in Exchange-Traded Funds (ETFs), two of the most popular options are Vanguard Dividend Appreciation ETF (VIG) and Vanguard Total Stock Market ETF (VTI).
Both of these ETFs have their own unique features and benefits, making them popular among investors.
In this section, I will provide an overview of both VIG and VTI, so you can decide which one is right for you.
What is VIG?
Vanguard Dividend Appreciation ETF (VIG) is an ETF that invests in companies that have a history of increasing their dividends over time.
VIG tracks the NASDAQ US Dividend Achievers Select Index, which includes companies that have increased their dividends for at least 10 consecutive years.
This ETF is designed to provide investors with steady income and long-term growth potential.
VIG has an expense ratio of 0.06%, which is slightly higher than VTI’s expense ratio.
However, VIG has a higher dividend yield than VTI, making it a popular choice for income-seeking investors.
VIG also has a lower beta than VTI, which means it is less volatile than the overall market.
What is VTI?
Vanguard Total Stock Market ETF (VTI) is an ETF that tracks the performance of the CRSP US Total Market Index.
This index includes all the stocks in the US equity market, making it a broad-based index fund.
VTI is designed to provide investors with exposure to the entire US stock market, making it a popular choice for investors who want to diversify their portfolio.
VTI has an expense ratio of 0.03%, which is lower than VIG’s expense ratio.
VTI also has a higher number of holdings than VIG, making it more diversified.
This ETF is designed to provide investors with long-term growth potential, making it a popular choice for investors who want to invest in the US stock market.
VIG vs VTI Investment Objective
VIG’s Investment Objective
When it comes to investment objectives, VIG, or the Vanguard Dividend Appreciation ETF, aims to track the performance of the NASDAQ US Dividend Achievers Select Index.
This index includes companies with a history of increasing their dividends for at least 10 consecutive years.
VIG’s underlying portfolio is made up of large-cap US stocks, with a focus on companies with strong fundamentals, stable earnings, and the ability to continue growing their dividends over time.
VTI’s Investment Objective
VTI, or the Vanguard Total Stock Market ETF, aims to track the performance of the CRSP US Total Market Index.
This index includes all investable US stocks, covering more than 99% of the US equity market. VTI’s underlying portfolio is well-diversified, with exposure to companies of all sizes and sectors.
While both VIG and VTI are equity ETFs that invest in US stocks, they have different investment objectives.
VIG focuses on dividend-paying companies with a history of increasing their dividends, while VTI aims to provide broad exposure to the entire US equity market.
VIG vs VTI Portfolio Composition
VIG’s Portfolio Composition
When it comes to VIG’s portfolio composition, it is important to note that this ETF focuses on dividend growth stocks.
As a result, the companies that make up VIG’s holdings are typically large-cap and established businesses that have a history of increasing their dividends over time.
According to ETF Database, VIG’s top five holdings were:
| Company | Ticker | % of Portfolio |
|---|---|---|
| Microsoft Corporation | MSFT | 8.28% |
| Procter & Gamble Co | PG | 5.36% |
| Johnson & Johnson | JNJ | 5.31% |
| Visa Inc | V | 4.80% |
| Mastercard Inc A | MA | 4.77% |
Overall, VIG’s portfolio is well-diversified, with holdings across a variety of sectors, including information technology, healthcare, consumer staples, and financials.
VTI’s Portfolio Composition
VTI’s portfolio composition is quite different from VIG’s, as it seeks to track the performance of the entire U.S. stock market.
As a result, VTI’s holdings are much more diverse and include companies of all sizes and from all sectors.
According to ETF Database, VTI’s top five holdings were:
| Company | Ticker | % of Portfolio |
|---|---|---|
| Apple Inc | AAPL | 5.08% |
| Microsoft Corporation | MSFT | 4.55% |
| Amazon.com Inc | AMZN | 3.23% |
| Facebook Inc A | FB | 1.72% |
| Berkshire Hathaway Inc B | BRK.B | 1.69% |
Overall, VTI’s portfolio is incredibly diverse, with holdings across all sectors and company sizes. This makes it a great option for investors who want exposure to the entire U.S. stock market.
VIG vs VTI Performance
VIG’s Performance
When it comes to performance, VIG has been a solid performer over the years.
As of the current date, VIG has a year-to-date return of 14.22%, which is higher than the S&P 500’s year-to-date return of 10.38%.
Over the past 5 years, VIG has returned an average of 16.05% per year, which is also higher than the S&P 500’s average return of 15.57% per year.
One thing to note about VIG’s performance is that it tends to be less volatile than the overall market.
This is because VIG focuses on dividend-paying stocks that have a history of increasing their dividends over time.
These types of stocks tend to be less volatile than growth stocks, which can lead to a smoother ride for investors.
VTI’s Performance
VTI has also been a strong performer over the years. As of the current date, VTI has a year-to-date return of 10.38%, which is in line with the S&P 500’s year-to-date return of 10.38%.
Over the past 5 years, VTI has returned an average of 15.57% per year, which is also in line with the S&P 500’s average return of 15.57% per year.
One thing to note about VTI’s performance is that it tends to be more volatile than VIG’s performance.
This is because VTI is a broader index fund that includes a wider range of stocks, including growth stocks that tend to be more volatile.
However, this can also lead to higher potential returns for investors who are willing to take on more risk.
VIG vs VTI Fees
VIG’s Fees
When comparing VIG and VTI, fees are an important factor to consider. VIG has an expense ratio of 0.06%.
This means that for every $10,000 invested, investors will pay $6 in fees each year. It’s important to note that this fee is higher than VTI’s expense ratio.
In addition to the expense ratio, VIG also has a $20 annual account fee.
This fee is waived for investors who have at least $10,000 invested in the fund, or who sign up for electronic delivery of account documents.
VTI’s Fees
VTI has a lower expense ratio than VIG, at 0.03%. This means that for every $10,000 invested, investors will pay $3 in fees each year. This is less than half of what investors would pay in fees for VIG.
It’s important to note that VTI does not have an annual account fee, unlike VIG. This means that investors can save money on fees simply by choosing VTI over VIG.
When it comes to fees, VTI is the clear winner over VIG. With a lower expense ratio and no annual account fee, investors can save money by choosing VTI over VIG.
Bottom Line: VIG vs VTI
After conducting a thorough head-to-head comparison between VIG and VTI, it’s clear that both ETFs have their strengths and weaknesses. Ultimately, the choice between the two will depend on the individual investor’s goals and risk tolerance.
VTI has a lower expense ratio than VIG, making it a more cost-effective option for those who prioritize minimizing fees.
Additionally, VTI is more diversified, holding over 3,000 securities compared to VIG’s 200. This diversification can help mitigate risk and provide more stable returns over the long term.
On the other hand, VIG is focused on dividend growth and has a higher yield than VTI.
This makes it an attractive option for income-seeking investors who prioritize steady dividend payments. VIG also has a strong track record of performance, with a compound annual growth rate (CAGR) of 8.51% over the past decade.
Both VIG and VTI are strong investment options and can provide investors with exposure to the US stock market.
It’s important to carefully consider your investment goals and risk tolerance before making a decision between the two.
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