VTI vs SPY: Side-by-Side ETF Comparison

Which one is better? VTI costs just 0.03 % and covers the whole U.S. market perfect for long-term, hands-off investors. SPY charges 0.09 % but offers unmatched volume, razor-thin spreads, and deep options liquidity, making it the go-to for tactical trades. Beyond cost and tradability, their performance 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.

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.

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 unrivaled 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.

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

Over nearly every major time frame YTD, 1-year, 3-year, 5-year, and 10-year SPY has consistently outperformed VTI, with differences ranging from 0.39% to 0.60%. This outperformance stems from SPY’s concentrated exposure to large-cap U.S. stocks, especially the top-tier tech giants like NVIDIA, Microsoft, and Apple, which have led the market in recent years. VTI, in contrast, includes over 3,000 additional small- and mid-cap stocks, many of which have underperformed in high-interest-rate or uncertain economic environments. While the performance gap may seem small, it can compound significantly over long-term investing horizons.

Risk Metrics

VTI shows higher volatility than SPY over both 1-year (12.17% vs. 11.42%) and 3-year (16.84% vs. 16.35%) periods. This is primarily due to VTI’s exposure to smaller, more volatile companies. These stocks often experience sharper price swings during periods of economic turbulence or market corrections. SPY’s lower volatility and higher 3-year Sharpe ratio (0.50 vs. 0.45) suggest that it has delivered better risk-adjusted returns. For investors focused on stability and risk management, SPY may be the more suitable choice.

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

Both VTI and SPY distribute dividends quarterly, but VTI edges ahead with a slightly higher dividend yield (~1.52% vs. ~1.50%). This small difference is due to VTI’s broader exposure to mid- and small-cap stocks, many of which distribute a larger portion of their earnings. SPY’s top holdings primarily growth-oriented mega-cap tech stocks either offer lower dividends or reinvest earnings. Investors looking to build a diversified income stream may find VTI marginally more appealing.

Explanation:

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

Fees & Liquidity

VTI shines with an ultra-low expense ratio of 0.03%, making it one of the most cost-efficient ETFs available. SPY’s 0.09% expense ratio is still low but three times higher on paper. However, SPY compensates with exceptional liquidity, offering tight bid-ask spreads (~0.01%) and massive daily volume ideal for traders and institutional investors. VTI, while also liquid, averages slightly wider spreads (~0.02%). For long-term buy-and-hold investors, VTI’s lower fee is advantageous, whereas SPY is the go-to vehicle for active trading.

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

VTI allocates about 98.89% to U.S. stocks and 0.56% to non-U.S. stocks, while also holding 0.55% in cash. These cash reserves typically stem from rebalancing or temporary holdings in micro-caps. SPY, on the other hand, maintains 99.38% in U.S. stocks and only 0.11% cash, reflecting a tighter alignment with the S&P 500 index. For investors seeking a broad snapshot of the U.S. market, VTI includes more names and market segments, whereas SPY delivers precise large-cap exposure.

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 has a heavier tilt toward technology (33.01%) compared to VTI’s 30.13%, reflecting its top-heavy structure favoring mega-cap growth stocks. VTI’s broader composition includes more industrials, real estate, and energy, which dilutes tech concentration and offers greater sector diversification. Investors bullish on AI and tech-driven growth may favor SPY, while those seeking balance across sectors may appreciate VTI’s more even distribution.

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 trades at a higher valuation across the board, with a forward P/E of 21.08, Price/Book of 4.08, and Price/Sales of 2.76, versus VTI’s P/E of 20.40, Price/Book of 3.66, and Price/Sales of 2.42. These higher multiples indicate that SPY’s holdings command a premium due to their profitability, brand strength, and investor confidence. VTI’s lower multiples suggest it offers more value, particularly during market rotations into small- and mid-cap segments. For value-oriented investors, VTI may present better long-term entry points.

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

VTI boasts stronger long-term projected earnings growth (10.01%), owing to its inclusion of high-growth small- and mid-cap firms. However, SPY leads in historical growth metrics, including book value (8.63%) and earnings (9.26%), thanks to the consistent performance of its established mega-cap constituents. This underscores a key tradeoff: VTI is more forward-looking, appealing to investors betting on future innovation, while SPY reflects proven, mature growth, attractive to those who value predictability and scale.

Which ETF Fits Your Portfolio - VTI vs SPY?

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

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.

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.

In short:

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

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

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