VTI vs IVV: Side-by-Side ETF Comparison

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

Table of Content

ETF Issuers & Investment Objective

• 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.
• 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.

Annual & Cumulative Returns

The first thing you notice is IVV’s clean sweep across every trailing period. Those half-percentage-point leads aren’t random: the S&P 500’s mega-cap dominance has been rewarded since 2022, and IVV is 100 % large-cap. VTI, by contrast, drags along mid- and small-caps that have lagged in the post-rate-hike environment, shaving a sliver off its annualized returns. In other words, breadth costs a bit of headline performance whenever market leadership is narrow.

Risk Metrics

Take a look at volatility and Sharpe ratio and the story lines up. Broader exposure means VTI carries more small-company noise, so its standard deviation creeps above IVV’s. With nearly identical returns over three years, that extra bumpiness translates straight into a lower Sharpe for VTI. Put simply, IVV’s purer large-cap focus has delivered a smoother ride lately.

• 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 funds throw off cash quarterly, yet VTI squeezes out a slightly higher yield. The explanation is structural: mid- and small-caps often retain more earnings, but when they do pay dividends the yields start higher because their share prices aren’t as bid up by institutional demand. In IVV, mega-growth names with minimal payouts dilute the overall figure just a tad.

Fees & Liquidity

Expense ratios are identical, so the real differentiator is the bid–ask spread. IVV’s monstrous daily turnover (over $25 billion on many sessions) lets market makers quote a pennywide spread, while VTI’s “mere” high liquidity settles closer to two pennies. For institutions moving size, that 1 bp edge helps explain why IVV has become the preferred hedge-vehicle among the big desks.

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

Notice VTI’s cash line? It’s the by-product of sampling thousands of constituents; tiny slivers of inflows can sit in cash overnight until Vanguard’s trading desk batches purchases. IVV doesn’t bother with that because it owns only 500 names and can deploy cash intra-day. The slightly lower U.S. weight in VTI comes from a handful of foreign-domiciled stocks that happen to list on U.S. exchanges but still count as “non-US.”

Regional Allocation

At first glance the numbers are practically twins, yet VTI tilts even more toward North America than IVV. Why? The S&P 500 includes a few multinationals incorporated in Europe (think Irish-domiciled tech hardware firms); VTI’s all-cap universe isn’t obligated to pick those up, so their 0.1 % slices fall away, nudging Europe Developed lower.

Sector Weights

The sector split highlights how concentration risk creeps into IVV. A 33 % tech weight reflects Apple, Microsoft and NVIDIA ballooning past trillion-dollar valuations. VTI’s extra 3,300 stocks dilute that influence, boosting Industrials, Healthcare and the “everything else” bucket. When leadership rotates away from Big Tech, VTI typically narrows the gap quickly.

Top 10 Holdings

Here’s the cap-weighting effect in action. In IVV the top ten soak up almost 35 % of assets, while in VTI they capture closer to 30 %. Vanguard’s inclusion of thousands of micro-positions forces the giants to give up share. The consequence: IVV moves more point-for-point with the FAANG-plus-N cluster, whereas VTI’s fate is spread across the entire economy.

Valuation & Growth Metrics

Valuation Ratios

IVV looks pricier on every forward metric, and that shouldn’t surprise anyone tracking the market narrative. Mega-cap growth stocks command premium earnings multiples because investors pay up for their scale, margin and AI optionality. VTI’s haul of regional banks, REITs and small-cap manufacturers drags down the overall P/E and Price-to-Book, making the fund look cheaper though part of that “cheapness” simply compensates for slower profit growth.

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, projected long-term earnings growth is actually higher for VTI, even though its recent EPS history trails IVV’s. That’s Wall Street signaling a reversion trade: analysts expect smaller companies, which bore the brunt of elevated borrowing costs, to rebound faster once rates stabilize. Meanwhile, IVV’s mature juggernauts continue compounding at high-single-digit clips, but their sheer size limits runway hence the relatively modest growth forecasts despite sparkling past results.

Which ETF Fits Your Portfolio - VTI vs IVV?

If you crave one-ticket exposure to the entire U.S. equity market, it’s hard to beat VTI. The fund’s micro-cap sprinkling gives you an automatic allocation to tomorrow’s potential winners, plus a valuation discount that may cushion returns when large-cap enthusiasm cools. Long-term builders who can stomach a touch more volatility and who value broad diversification in tax-advantaged accounts will likely find VTI the more future-proof core holding.

On the other hand, if your goal is to track the S&P 500 with surgical precision whether for tactical hedging, factor overlays or simply riding Big Tech’s momentum IVV is the cleaner instrument. Its razor-thin bid-ask spreads and colossal trading volume make in-and-out execution dirt-cheap, and its mega-cap tilt has delivered a slightly smoother, higher-beta ride in the AI era. Income-seekers and low-turnover investors won’t notice much difference in fees or distributions, so the real separator is exposure profile: IVV amplifies what’s working at the top of the market; VTI diversifies you into what might work next.

In short, choose VTI if you want the broadest possible slice of U.S. capitalism at a rock-bottom cost, and pick IVV if you prefer a pure-play S&P 500 tracker with institutional-grade liquidity. Either way, you’re getting a low-fee, tax-efficient vehicle but the better fit depends on whether you value breadth or focus in your equity core.