Total Market vs S&P 500: Does It Matter?
VTI holds the entire U.S. market; VOO holds the largest 500. The extra ~3,000 small and mid caps sound like a big difference, but the two move almost in lockstep. Here's why.
Don't have time? Here's what you need to know:
- 1VTI (total market) holds the S&P 500's 500 companies plus ~3,000 more mid- and small-caps; VOO holds just the 500.
- 2Both are cap-weighted and dominated by the same mega-caps, so their returns track within a fraction of a percent.
- 3Both charge about 0.03%, making the choice one of the lowest-stakes decisions in investing.
- 4Don't hold both for diversification — they overlap almost entirely; pick one core unless tax-loss harvesting.
The Difference, in One Line
An S&P 500 ETF like VOO holds the 500 largest U.S. companies. A total-market ETF like VTI holds those same 500 plus roughly 3,000 more — the mid-cap and small-cap companies the S&P 500 leaves out. On paper that's a huge difference in number of holdings. In practice, it barely changes anything, and the reason is how index funds are weighted.
Both funds are capitalization-weighted, meaning each company's slice is proportional to its size. Because the largest U.S. companies dwarf everything else, those giants dominate both funds. The extra 3,000 small and mid caps in VTI sit at the bottom and collectively make up only a modest fraction of the fund — so they nudge the total return rather than transform it.
Why the Returns Track So Closely
Because the same mega-caps drive both funds, VTI and VOO post remarkably similar returns year after year — typically within a fraction of a percent of each other. When large caps lead, as they did for much of the 2010s and early 2020s, the S&P 500 edges ahead. When small and mid caps have their moment, total market pulls slightly in front. Over decades, the two are close to a wash.
This is the central point: choosing between total market and the S&P 500 is one of the lowest-stakes decisions in investing. Both are broadly diversified, both are dominated by the same companies, and both charge rock-bottom fees — around 0.03% for VTI and VOO alike. You are not choosing between a good fund and a bad one; you're choosing between two excellent funds that happen to differ at the margins.
| Total Market (VTI) | S&P 500 (VOO) | |
|---|---|---|
| Holdings | ~3,500 companies | ~500 companies |
| Includes mid & small caps | Yes | No |
| Weighting | Cap-weighted | Cap-weighted |
| Expense ratio | ~0.03% | ~0.03% |
| Dominated by | Same mega-caps | Same mega-caps |
| Long-run return | Nearly identical | Nearly identical |
Small Reasons to Prefer Each
Total market has a slight theoretical edge for completeness: it owns the whole U.S. stock market, including the small and mid caps that have historically carried a modest extra return premium over long periods. It also captures a company's growth from small-cap all the way up, rather than only adding it once it's large enough to enter the S&P 500. Purists who want to 'own everything' lean toward VTI.
The S&P 500 has its own appeals. It's the most-quoted benchmark in the world, its companies are slightly more stable on average, and in a taxable account it can be marginally easier to tax-loss harvest against a total-market fund precisely because the two are similar but not identical. For a 401(k) lineup, an S&P 500 index fund is often the cheapest and most available option, which settles it.
Tip: If your 401(k) offers a cheap S&P 500 fund but no total-market option, just use the S&P 500 fund — the difference versus total market is too small to chase.
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Which to Pick
Pick one and don't agonize. If you want the theoretically complete U.S. market in a single fund, choose VTI. If you prefer the classic benchmark or that's what your account offers cheaply, choose VOO. Either way you own a broadly diversified, ultra-low-cost slice of U.S. business, and your long-run outcome will be nearly the same.
What you should not do is own both in large amounts thinking you've diversified — they overlap almost entirely, so holding both just adds complexity without adding meaningful diversification. One in your taxable account and the other as a tax-loss-harvesting partner is the only common reason to hold both deliberately.
Important: Owning both VTI and VOO doesn't diversify you — they hold the same mega-caps and move together. Pick one as your U.S. core unless you're using the pair for tax-loss harvesting.
Frequently Asked Questions
Is VTI better than VOO?
Neither is clearly better — they're nearly identical in return and both cost about 0.03%. VTI (total market) adds roughly 3,000 mid- and small-cap companies the S&P 500 leaves out, but because both are cap-weighted and dominated by the same mega-caps, the difference is a fraction of a percent over time. Choose VTI for completeness or VOO for the classic benchmark; you can't go far wrong either way.
Why do total market and S&P 500 returns barely differ?
Both funds are capitalization-weighted, so the largest companies dominate each one. The S&P 500's 500 names already make up the vast majority of total U.S. market value, and the extra ~3,000 small and mid caps in a total-market fund collectively carry only a modest weight. With the same giants driving both, their returns track within a fraction of a percent year to year.
Should I own both VTI and VOO?
Usually no — they overlap almost completely, so holding both adds complexity without meaningful diversification. The main exception is tax-loss harvesting in a taxable account: because the two are similar but not identical, some investors hold one and use the other as a swap partner to harvest losses without a wash sale. Otherwise, pick one as your U.S. core.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.