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The Vanguard Total Stock Market ETF (VTI) and the iShares Core S&P Total US Stock Market ETF (ITOT) offer broad market coverage and minimal expenses.
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The Vanguard ETF is a bit broader than the iShares ETF.
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There is actually no bad choice in this comparison.
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An easy way to lay the foundation for a long-term portfolio and diversify it is to use total market funds. Whether they focus on stocks or bonds, these funds give you the entire market under a single symbol. If you find the right one, it will probably be incredibly affordable to own as well.
Two of the biggest (and best) are the Vanguard Total Stock Market ETF (NYSEMKT: VTI) and the iShares Core S&P Total US Stock Market ETF (NYSEMKT:ITOT). And on the surface, the two ETFs appear identical. But, as with many ETFs, sometimes you need to dig into the details to determine if one is a better buy.
The Vanguard Total Stock Market ETF tracks the US Total Market CRSP Index. This index is designed to represent approximately 100% of the investable US stock market, including large, mid, and small cap stocks.
The iShares Core S&P Total US Stock Market ETF tracks the S&P Total Market Index. It also aims to capture the entire US stock market and is a combination of the S&P 500 and the S&P Completion Index.
Translation: They both invest in the entire American stock market. They just execute their plans in slightly different ways.
The biggest difference between the two funds is the number of individual holdings. The Vanguard ETF has about 3,500 shares, but the iShares ETF has closer to 2,500. While that seems like a big difference, the material impact is relatively negligible.
Most of the 1,000 “additional” stocks the Vanguard ETF owns are microcap stocks that the iShares fund excludes due to liquidity concerns and other size-related factors. In a market cap-weighted strategy, those 1,000 stocks, even together, may represent only 1% to 2% of the total portfolio.
Most of the portfolio of both ETFs is essentially identical. Therefore, these funds have virtually the same performance and their historical track records are virtually identical.
Since both charge a 0.03% expense ratio, are very liquid, and highly tradable, neither ETF has a cost advantage.
This is the closest pitch you will find.
The only material difference between the two funds is the 1,000 additional shares the Vanguard ETF holds. But since these are all small microcap stocks, their impact on portfolio performance will be minimal at best.