S&P 500 ETF vs Total Market ETF: Which Index Should You Track?
Last updated: March 2026
S&P 500 ETFs hold the 500 largest U.S. companies, while total market ETFs include the entire U.S. stock market — roughly 3,600 stocks including small and mid-cap companies. Both deliver very similar returns over time, but total market ETFs offer slightly broader diversification at the same ultra-low cost.
Quick Comparison
| Feature | S&P 500 ETF (VOO) | Total Market ETF (VTI) |
|---|---|---|
| Number of Holdings | ~503 | ~3,600 |
| Expense Ratio | 0.03% | 0.03% |
| U.S. Market Coverage | ~80% of total value | ~100% of total value |
| Small-Cap Exposure | None | Yes (~8%) |
| Mid-Cap Exposure | Limited | Yes (~17%) |
| 10-Year Return | ~12.5% annually | ~12.3% annually |
| Dividend Yield | ~1.4% | ~1.4% |
| Tracking Index | S&P 500 | CRSP US Total Market |
Why These Two Indexes Are So Similar
The S&P 500 and the total U.S. stock market are more alike than different. The S&P 500 comprises approximately 500 large-cap stocks that represent roughly 80% of the total U.S. stock market by market capitalization. This means that both indexes are dominated by the same mega-cap companies — Apple, Microsoft, Amazon, Nvidia, and so on.
Because the S&P 500 accounts for such a large share of the total market, the performance of both indexes tracks very closely. Over the past 20 years, the annual return difference between VOO and VTI has typically been less than 0.3 percentage points. In most years, the difference is negligible.
The additional roughly 3,100 stocks in the total market index are predominantly small and mid-cap companies that collectively represent only about 20% of the total market value. Because these smaller companies make up such a small share, they have minimal impact on the total market fund's overall return in most years.
The Case for Total Market
The primary argument for a total market ETF is broader diversification. By owning the entire market, you capture returns from every segment — large, mid, and small-cap. Historically, small-cap stocks have delivered slightly higher long-term returns than large-caps, though with more volatility. A total market fund captures this premium automatically.
Total market funds are also more theoretically sound from a passive investing perspective. If you believe in efficient markets and want to own the entire market at its natural market-cap weights, a total market fund is the purest expression of that philosophy. The S&P 500, by contrast, is a curated index with a committee that decides which stocks to include and exclude.
Another subtle advantage of the total market approach is that you never miss the boat on a rising company before it joins the S&P 500. Companies like Tesla were in the total market index long before they were large enough to be added to the S&P 500. By the time a stock enters the S&P 500, much of its growth may have already occurred.
The Case for S&P 500
The S&P 500 is the most recognized stock market benchmark in the world, and it has practical advantages. Its extensive track record makes it easy to compare performance, and the vast majority of financial research and historical data uses the S&P 500 as the default benchmark.
The S&P 500 selection committee screens for profitability, which means only established, profitable companies are included. This provides a quality filter that the total market index lacks — the total market includes unprofitable companies and speculative stocks that can drag down returns during bear markets.
For practical purposes, the S&P 500 also offers slightly more options. VOO, IVV, and SPY all track the S&P 500 with minor fee and liquidity differences. SPY is the most heavily traded ETF in the world, making it ideal for investors who trade frequently or use options strategies.
S&P 500 ETF (VOO) vs Total Market ETF (VTI): Key Metrics
The Verdict: Either Is Excellent — Just Pick One and Stick With It
The difference between an S&P 500 ETF and a total market ETF is so small that it should not keep you up at night. Both are excellent core portfolio holdings. If you want maximum diversification, choose VTI (total market). If you prefer the simplicity and name recognition of the S&P 500, choose VOO. The far more important decision is how much you invest and how long you hold — not which of these two nearly identical indexes you pick.
Frequently Asked Questions
Should I own both VOO and VTI?
Is VTI more risky than VOO because it includes small companies?
Which has performed better historically — VOO or VTI?
Can I use an S&P 500 ETF as my only investment?
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