I know these three ETFs are often used as benchmarks, but I’d love to hear fresh insights about them. There’s an old discussion on this topic, but with how much has changed over the years, maybe it’s worth revisiting.
For example, small- and mid-caps have historically done better than large caps, so what’s the case for picking VOO over VTI?
Also, how would your investment strategy or goals factor into which one you choose? Let’s discuss.
The main reason to go with VOO over VTI is if you don’t want the extra exposure to small- and mid-cap stocks. VOO has less risk because it focuses on large caps, which typically have lower volatility and more stable returns. That’s the textbook reason anyway.
The real reason people might pick VTI is diversification. With VTI, you’re spreading your bets more broadly, which can protect you from the crazy swings of the largest companies. Think about Tesla a couple of years ago or Nvidia right now—it’s been a wild ride.
That said, the S&P 500 is extremely top-heavy these days, and those big names have been performing well. Personally, I’m all-in on the S&P 500 through VOO because I think large caps dominate the market. Small caps can’t compete with giants like Amazon or Microsoft. If a small player does rise, the big guys just buy them out.
Long story short: VOO for life. Large caps are king, and diversification for the sake of diversification just drags down returns, in my opinion.
@Mackenzie
Don’t count small caps out! AVUV could shine again one day. Patience is key.
@Mackenzie
I’ve also heard the argument that small-cap premiums don’t even exist when you adjust for other factors. So unless you’re after more diversification, it doesn’t seem worth it to take on the added volatility.
@Victor
I think small caps should, in theory, grow faster because they’re working off a smaller base. But the economy today feels rigged against them. Big companies dominate, and small ones get squeezed out. It’s like a canopy of large trees choking out the sunlight for anything underneath.
@Mackenzie
You’re not wrong, but recent studies suggest the small-cap premium doesn’t really hold up when you control for things like quality. High-quality small caps might outperform high-quality large caps, but it’s still a niche play. And yeah, today’s market is all over the place—rationality feels like it’s out the window.
Over 90% of investors can’t beat the S&P 500 consistently for more than 15 years. By sticking with VOO, I’m basically winning the game without lifting a finger. That’s enough for me.
VOO just sounds more fun to say, doesn’t it?
Keenan said:
VOO just sounds more fun to say, doesn’t it?
Honestly, the best metric for picking an investment.
What about VONG? Definitely not VT, though. I’m investing to make money, not to lose while feeling smug about it.