IVV vs VTI: Side-by-Side ETF Comparison

Which one is better? IVV focuses on the S&P 500’s mega-caps for slightly smoother performance and unmatched liquidity, while VTI spreads your bet over virtually every listed U.S. stock accepting a bit more volatility and a fractional return drag.
Choose IVV when precise, low-friction S&P 500 exposure is the priority. Choose VTI for maximum diversification.

Table of Content

ETF Issuers & Investment Objective

• IVV: Launched in 2000 and overseen by iShares, IVV tracks the large-cap-only S&P 500 Index. By concentrating on 500 of the biggest, most liquid U.S. companies, the fund delivers precise exposure to the market’s headline benchmark while sidestepping smaller-cap volatility.
• VTI: Run by Vanguard since its 2001 debut, VTI aims to replicate the CRSP US Total Market Index about 100 % of the investable U.S. equity universe. The mandate sweeps in large-, mid-, small- and micro-cap names across every sector, giving investors a single-ticket gateway to the full breadth of American capitalism.

Annual & Cumulative Returns

While the performance gap between VTI and IVV appears modest, IVV edges out VTI across all major timeframes from year-to-date to 10-year returns. The key reason lies in their market coverage: IVV focuses solely on the S&P 500’s large-cap companies, which have led the bull run, particularly mega-cap tech. VTI, on the other hand, includes thousands of smaller stocks that haven’t kept pace in recent years, slightly dragging down total returns. For investors seeking maximum long-term growth, this historical outperformance by large caps may make IVV more appealing, though it comes with higher concentration risk.

Risk Metrics

IVV demonstrates slightly lower volatility over both 1-year and 3-year periods and posts a better Sharpe ratio. This is expected its exclusive focus on mature, large-cap firms offers greater price stability and earnings consistency. VTI, by including small- and mid-cap stocks, naturally inherits more short-term volatility and greater sensitivity to macroeconomic shifts like interest rate changes or recession fears. If risk-adjusted returns matter to you, IVV offers a smoother ride, while VTI’s broader scope may deliver better diversification in the long run if you can tolerate a bumpier journey.

• Volatility reflects the degree of price fluctuations; higher volatility often correlates with greater risk and potential returns.
• Sharpe Ratio measures risk-adjusted returns, where higher ratios indicate more favorable returns for the risk assumed.

Dividend Yield & Growth

• QQQ: Dividend Yield approximately 0.91%, paid quarterly. Suitable for investors more focused on capital appreciation than income.
• IVV: Dividend Yield around 1.50%, also paid quarterly. A higher yield attractive to income-focused investors.

Both VTI and IVV pay dividends quarterly, but VTI edges ahead slightly in yield. That minor difference is largely due to the inclusion of dividend-paying mid- and small-cap stocks in VTI, which can boost income slightly. Still, both ETFs are built for total return, not yield chasing. Investors prioritizing steady income might find VTI marginally more attractive, but for most long-term holders, the difference in yield is too small to be a decisive factor.

Fees & Liquidity

Expense ratios are identical at a rock-bottom 0.03 %, but IVV pulls ahead in day-to-day tradability. Its average bid–ask spread is tighter (≈0.01 % vs. VTI’s ≈0.02 %), and its daily trading volume is significantly higher, making it more cost-efficient for large trades or tactical entries. VTI still maintains strong liquidity and low spreads, but for institutional investors or active traders, IVV offers superior execution efficiency. For passive buy-and-hold investors, however, this difference is largely academic.

Explanation:

• Expense Ratio is the annual fee taken by the fund manager, expressed as a % of your investment.
• Bid-Ask Spread is the difference between the buying and selling price. Smaller spreads mean lower transaction costs.

ETF Composition: Asset Classes

IVV is nearly 100 % large-cap U.S. equities, while VTI extends across the entire market cap spectrum. That means VTI captures small- and mid-cap exposure, giving it a slightly lower allocation to large-cap names. The presence of a small cash buffer in VTI is a result of its more complex structure managing over 3,000 holdings requires some cash management flexibility. IVV’s more concentrated portfolio is easier to manage and doesn’t require the same liquidity buffer.

Regional Allocation

Despite both ETFs being U.S.-focused, a tiny slice of foreign exposure still appears in each due to companies domiciled overseas but listed on U.S. exchanges. The difference is negligible for most retail investors. However, if you're looking for pure U.S. exposure, IVV sticks closer to the S&P 500 definition, while VTI includes some spillover from globally-operating micro- and mid-cap companies with U.S. listings.

Sector Weights

IVV is more heavily weighted toward technology, which explains much of its recent performance lead. Its concentration in mega-cap names like Apple, Microsoft, and NVIDIA amplifies sector exposure. VTI, with its thousands of holdings, balances that weight more evenly across sectors such as Industrials, Financials, and Healthcare. This diversification can be beneficial during periods when tech underperforms or sector rotation kicks in. Investors seeking growth may prefer IVV’s tech-heavy tilt; those wanting broader economic coverage may lean toward VTI.

Top 10 Holdings

IVV’s top 10 holdings make up a larger share of the fund’s total assets than VTI’s roughly 35 % vs. 30 %. That’s because IVV tracks only the S&P 500, where a few mega-cap stocks dominate the index. In VTI, the sheer number of small-cap stocks dilutes the impact of any single company, which can reduce concentration risk. If you’re wary of overweighting a handful of tech giants, VTI provides a more diversified approach at the top.

Valuation & Growth Metrics

Valuation Ratios

IVV looks slightly more expensive across most valuation ratios: forward P/E, Price/Sales, and Price/Book. These premiums reflect the market’s confidence in the earnings power and pricing power of the largest U.S. firms. VTI’s valuations are a bit lower, primarily due to the inclusion of value-oriented and smaller firms that haven't enjoyed the same valuation multiples. Long-term investors who favor “buying the market” at a discount may appreciate VTI’s broader base and lower aggregate multiples.

Explanation:

• P/E Ratio = Price divided by earnings. Indicates how expensive a fund is relative to profits.
• Price/Book = Price vs book value (assets minus liabilities).
• Price/Sales = Price relative to total revenue.
• Price/Cash Flow = Price relative to how much cash the companies generate.

Growth Expectations

Interestingly, VTI shows slightly stronger long-term earnings growth projections despite trailing IVV in past performance. That’s because analysts expect mid- and small-cap companies currently beaten down or undervalued to recover more strongly when interest rates ease and economic conditions stabilize. IVV's growth outlook remains solid but reflects the maturity of its holdings. If you’re betting on a broad-based U.S. recovery or looking for more upside from underappreciated segments, VTI offers potential, but with added risk.

Which ETF Fits Your Portfolio - IVV vs VTI?

If you’re looking for a single fund that captures the entire U.S. stock market from mega-caps to micro-caps VTI offers unmatched breadth. By holding thousands of companies, it gives you instant exposure to both today’s market leaders and tomorrow’s potential disruptors. This broad diversification helps reduce idiosyncratic risk and adds exposure to underappreciated segments of the economy, though it comes with slightly more volatility and tracking error compared to the S&P 500. For long-term investors focused on growth, tax efficiency, and total market representation, VTI is a compelling all-in-one solution.

IVV, in contrast, delivers pure S&P 500 exposure tracking the top 500 U.S. companies with precision and massive daily liquidity. It’s ideal for investors who want concentrated large-cap performance, especially in environments where mega-cap tech dominates. With tighter bid-ask spreads and strong institutional support, IVV is also well-suited for tactical positioning, core equity exposure, or pairing with other factor-based strategies. Its performance has slightly outpaced VTI’s in recent years thanks to its heavier tech tilt and cleaner index structure.

In summary, go with VTI if you prioritize maximum diversification and all-cap exposure. Choose IVV if you prefer large-cap focus, easier execution, and tighter correlation to the market benchmark. Both are ultra-low-cost, tax-efficient ETFs but your ideal fit comes down to whether you value comprehensive market breadth or targeted index precision.