SPY vs VTI: Side-by-Side ETF Comparison

Which one is better? In the SPY vs VTI matchup, SPY stands out for its unmatched trading volume, tight spreads, and deep options market, making it ideal for active traders. VTI, with its 0.03 % fee and total U.S. market exposure, is better suited for long-term investors seeking broad diversification. Outside of tradability and coverage, performance between the two is nearly identical.

Table of Content

ETF Issuers & Investment Objective

When comparing VTI with SPY, begin with the sponsors Vanguard and State Street Global Advisors (SSGA) two giants that helped shape today’s ETF industry.

SPDR S&P 500 ETF Trust (SPY)
Introduced in January 1993 by SSGA, SPY is both the oldest and most actively traded ETF on the planet. Its mandate is straightforward: track the S&P 500 Index, the bellwether for large-cap U.S. equities, by holding each constituent at its index weight. Structured as a unit-investment trust (UIT), SPY cannot reinvest dividends intraday or lend securities features that slightly raise its 0.09 % expense ratio relative to VTI but those constraints have not dimmed its appeal. Thanks to unrivalled trading depth, tight bid-ask spreads, and near-24-hour price discovery via global futures, SPY remains the go-to vehicle for institutions, traders, and asset allocators seeking instant, high-liquidity exposure to America’s corporate elite.

Vanguard Total Stock Market ETF (VTI)
Launched in May 2001, VTI embodies Vanguard’s low-cost, long-horizon philosophy. The fund seeks to mirror the CRSP US Total Market Index, a benchmark that captures virtually 100 % of the investable U.S. equity universe from blue-chip mega-caps to thinly traded micro-caps. Instead of holding every security in perfect proportion, VTI uses a sampling approach that closely matches the index’s sector, style, and market-cap characteristics while keeping costs down. With an expense ratio of 0.03 %, Vanguard positions VTI as an all-in-one “core” holding for investors who want broad diversification, automatic rebalancing, and full participation in U.S. equity growth without the need to juggle multiple funds.

Bottom line: VTI offers total-market coverage at rock-bottom cost, whereas SPY delivers large-cap precision with unmatched liquidity. Your choice hinges on whether you value all-cap breadth or mega-cap efficiency.

Annual & Cumulative Returns

In the SPY vs VTI performance breakdown, SPY slightly outperforms VTI across most timeframes, including 1-year, 3-year, 5-year, and 10-year returns. This is largely due to SPY’s focus on large-cap stocks, particularly mega-cap tech names that have led the recent bull markets. VTI, by contrast, includes a broader mix of mid-, small-, and micro-cap stocks many of which have lagged during periods of macroeconomic uncertainty or rising interest rates. While the return gap is not dramatic, it reflects how broader diversification in VTI can slightly dilute short-term performance in exchange for broader exposure.

Risk Metrics

SPY and VTI are both relatively low-volatility ETFs, but VTI’s inclusion of smaller and less liquid stocks leads to a slightly bumpier ride. Over the last three years, VTI’s volatility has averaged about half a percentage point higher than SPY’s. This increased risk is also reflected in its lower Sharpe ratio, indicating slightly lower risk-adjusted returns. For investors focused on portfolio stability, especially during downturns, SPY’s narrower scope may offer a smoother experience. VTI, on the other hand, may offer more upside during economic expansions when small caps tend to outperform.

Explanation:

• Volatility reflects how much the price moves over time higher volatility means more frequent or larger price swings.
• Sharpe Ratio measures risk-adjusted returns: how much return you get for each unit of risk. Higher is better.

Dividend Yield & Growth

While both ETFs distribute dividends quarterly, VTI has historically offered a marginally higher yield, thanks to its broader mix of companies, many of which return more capital to shareholders. The difference about 2 basis points is minor, but it reflects VTI’s exposure to more traditional dividend-payers outside of the large-cap growth cohort. SPY’s yield is slightly lower, given its concentration in tech leaders that typically reinvest rather than distribute profits. For income-focused investors, VTI may provide a slight edge in yield without compromising growth exposure.

Explanation:

• Dividend Yield is the percentage of the fund's current price that is paid out annually as dividends.

Fees & Liquidity

The cost gap between SPY and VTI is modest in absolute terms, but meaningful over long horizons. VTI charges just 0.03%, making it one of the cheapest ways to access the full U.S. equity market. SPY’s 0.09% fee is still competitive but reflects its more complex structure as a unit investment trust. Where SPY shines is in liquidity: it consistently ranks among the most traded ETFs in the world, with extremely tight bid-ask spreads and deep options markets. That makes it ideal for frequent traders, while VTI remains a better fit for buy-and-hold investors aiming to minimize drag from fees.

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

SPY and VTI both provide heavy U.S. equity exposure, but VTI’s broader mandate means it holds a slightly more diversified asset mix. It includes more cash on hand often from flows and rebalancing and captures segments of the market SPY intentionally excludes, such as small regional banks, micro-cap industrials, and certain REITs. While these allocations are small, they contribute to VTI’s “total market” character. SPY, by comparison, is more streamlined, holding only the largest and most liquid companies, which helps explain its tighter correlation to headline U.S. indices like the S&P 500.

Regional Allocation

Despite being U.S.-focused, there are tiny geographic variances. VTI holds 99.57% in North America, with minor allocations to Europe Developed (0.30%) and UK (0.03%), mostly due to ADR listings or dual-listed firms. SPY maintains a slightly purer U.S. footprint (99.48%), making it a better match for investors seeking strict domestic-only exposure. These differences are small but may matter for institutional mandates or portfolio compliance rules.

Sector Weights

SPY leans more heavily into technology over 33% of the fund due to the dominance of firms like Apple, Microsoft, and NVIDIA. VTI, while still tech-heavy, dilutes this exposure by holding a wider range of companies across other sectors, including small-cap energy, real estate, and financials. This makes VTI more balanced in sector representation, though it slightly mutes performance when tech is in a strong uptrend. Investors seeking growth through innovation may prefer SPY, while those aiming for diversification across economic cycles could lean toward VTI.

Top 10 Holdings

SPY’s top 10 holdings account for a larger portion of the fund, with companies like Microsoft, NVIDIA, and Apple each representing over 6%. VTI’s top holdings are more spread out, with Apple at 5.94% and others below 5.5%, due to the inclusion of thousands of smaller companies. This results in lower concentration risk in VTI but may also limit upside during mega-cap rallies. Investors seeking broad diversification may prefer VTI, while those targeting mega-cap growth exposure might lean toward SPY.

Valuation & Growth Metrics

Valuation Ratios

SPY’s higher valuations seen in its P/E, Price/Book, and Price/Sales ratios indicate that investors are willing to pay a premium for the perceived stability, earnings quality, and dominance of its constituents. VTI’s lower ratios reflect its inclusion of thousands of smaller, often less profitable companies, many of which are undervalued or in earlier stages of growth. Investors looking for quality and profitability might gravitate toward SPY, while those seeking exposure to potential turnaround stories or underpriced sectors might see more value in VTI.

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

The growth outlook in the SPY vs VTI comparison tells a nuanced story. SPY boasts stronger historical growth in earnings and book value, reflecting the operational excellence and consistent returns of its mega-cap holdings. However, VTI edges out in forward-looking growth projections, thanks to its inclusion of emerging companies with higher expected earnings trajectories. This highlights a classic trade-off: SPY offers reliability and proven track records, while VTI provides exposure to the future growth engines of the U.S. economy, albeit with more uncertainty.

Which ETF Fits Your Portfolio - SPY vs VTI?

Choosing between SPY and VTI ultimately depends on your investment goals, risk tolerance, and time horizon.

On the other hand, if you prioritize liquidity, simplicity, and mega-cap strength, SPY offers unmatched real-time tradability and sector concentration. It tracks the S&P 500, home to the most influential and profitable U.S. companies, and has slightly outperformed VTI over most time periods due to its tech-heavy weighting. SPY is ideal for active traders, institutional participants, or investors who want direct exposure to market leaders without the drag of underperforming small-caps.

If you're looking for broad, long-term exposure to the entire U.S. stock market, VTI is the more comprehensive choice. It includes large-, mid-, small-, and micro-cap stocks, offering deeper diversification and a slightly lower valuation profile. VTI is especially well-suited for buy-and-hold investors, indexing purists, or those who want exposure to early-stage growth opportunities across all segments of the U.S. equity market. Its ultra-low expense ratio and strong projected earnings growth also make it attractive for cost-conscious, long-term portfolios.

In short:

Choose SPY if you prefer large-cap stability, ultra-high liquidity, and a fund that mirrors the headline U.S. stock market more directly.

Choose VTI if you want total market coverage, stronger diversification, and are comfortable with a bit more volatility for long-term growth.

Both are excellent ETFs but how you deploy them should reflect your broader strategy.