VTI vs VUG : ETF Comparison

When choosing between ETFs, consider these key factors: expense ratios (lower is better), historical performance and consistency, underlying holdings and diversification, risk metrics like volatility and beta, liquidity and trading volume, and how the ETF fits your investment goals and risk tolerance. Use our comparison tools to analyze these factors side by side.

An expense ratio is the annual fee charged by an ETF, expressed as a percentage of your investment. For example, a 0.10% expense ratio means you pay $10 annually for every $10,000 invested. Lower expense ratios mean more of your money stays invested and compounds over time. Even small differences in expense ratios can significantly impact long-term returns.

Diversification is key to managing risk. While a single broad-market ETF can provide good diversification, combining multiple ETFs can help you fine-tune your exposure to different sectors, regions, or investment styles. Consider your risk tolerance, investment goals, and time horizon when deciding between a simple one-ETF approach or a more complex multi-ETF portfolio.

ETFs trade like stocks throughout the day and typically have lower expense ratios than mutual funds. Mutual funds are priced once at the end of each trading day. ETFs often provide better tax efficiency and more transparency about their holdings. However, mutual funds may offer more active management options and can be easier for automatic investing plans.

Rebalancing frequency depends on your investment strategy and market conditions. Many investors rebalance annually or when their allocation drifts more than 5-10% from their target. More frequent rebalancing can help maintain your desired risk level, but it may increase transaction costs. Consider your investment goals, risk tolerance, and the costs of rebalancing when deciding on frequency.