Vanguard VTI Alternatives: A Comprehensive Guide to Similar ETFs

Investors seeking broad exposure to the U.S. stock market often turn to Vanguard Total Stock Market ETF (VTI), renowned for its low expenses and comprehensive index coverage. However, there are several other companies that offer similar ETFs with varying features. In this guide, we will explore notable alternatives to VTI and the reasons why they might be worth considering.

Notable Alternatives to Vanguard VTI

While Vanguard VTI offers a well-rounded yet straightforward investment in the U.S. stock market, other companies provide alternatives with unique features and strategies. Here are some of the top ETFs that can serve as similar investments to VTI.

iShares: iShares Core SP Total U.S. Stock Market ETF (ITOT)

ITOT iShares Core SP Total U.S. Stock Market ETF aims to track the performance of the SP Total Market Index, providing exposure to a wide range of U.S. stocks, including large, mid, small, and micro-cap shares. This ETF seeks to encompass the entire U.S. market, giving investors a broad-based investment option.

Schwab: Schwab U.S. Broad Market ETF (SCHB)

SCHB Schwab U.S. Broad Market ETF seeks to track the total return of the Dow Jones U.S. Broad Stock Market Index, which includes a vast array of U.S. stocks. This ETF is ideal for investors seeking exposure to a broad spectrum of the U.S. stock market, covering all cap sizes.

SPDR: SPDR Portfolio Total Stock Market ETF (SPTM)

SPTM SPDR Portfolio Total Stock Market ETF is designed to track the performance of the SP Total Market Index, offering broad exposure to the U.S. stock market. This ETF seeks to provide a comprehensive representation of the market, making it a suitable alternative to VTI for investors.

Fidelity: Fidelity ZERO SM Total Market Index Fund (FZROX)

FZROX Fidelity ZERO SM Total Market Index Fund, though technically a mutual fund, offers no expense ratio, making it an attractive option for investors seeking a similar broad-market exposure to VTI. This fund aims to provide broad exposure to the U.S. stock market without any fees, which can significantly reduce the cost of investment.

Invesco: Invesco SP 500 Low Volatility ETF (SPLG)

SPLG Invesco SP 500 Low Volatility ETF focuses on low-volatility stocks within the SP 500, which can be advantageous for investors seeking broad market exposure with a focus on stability. While not a direct equivalent to VTI, this ETF can serve as an alternative for those seeking a lower-risk option within the U.S. stock market.

Considerations When Choosing an Alternative to VTI

When considering alternatives to Vanguard VTI, it is important to evaluate key factors such as expense ratios, tracking error, and the underlying index each ETF follows. These elements can significantly impact your investment returns and overall portfolio performance.

Expense Ratios

The expense ratio is a crucial factor to consider when choosing an ETF. ETFs with lower expense ratios are generally more cost-effective. For example, VTI has a very low expense ratio, making it a popular choice. However, comparing similar alternatives can help investors find a competitive option.

Tracking Error

Tracking error refers to the difference between the return of the ETF and the return of the benchmark index it is meant to track. A lower tracking error is generally preferred as it indicates a closer alignment with the index. This is particularly important for investors who closely monitor their performance relative to the market benchmark.

Underlying Index

The underlying index is another important consideration. Vanguard VTI tracks the CRSP US Total Market Index, but other alternatives may follow different indexes such as the SP Total Market Index or the Dow Jones U.S. Broad Stock Market Index. Each index might have its strengths and weaknesses, which can affect the overall performance of the ETF.

Top ETFs as Alternatives to VTI

Here are some additional ETFs that can serve as alternatives to Vanguard VTI:

SPDR SP 500 ETF Trust (SPY): Tracks the SP 500 index and provides broad exposure to the largest U.S. companies. iShares Core SP 500 ETF (IVV): Another popular choice that tracks the SP 500 index with a lower expense ratio. Schwab U.S. Broad Market ETF (SCHB): Seeks to track the total return of the Dow Jones U.S. Broad Stock Market Index, offering broad market exposure. iShares Russell 3000 ETF (IWV): Tracks the Russell 3000 index, providing exposure to a broader range of U.S. stocks than the SP 500. Invesco QQQ (QQQ): Focuses on the technology sector, though it can be considered for a more specialized U.S. market exposure. iShares Core SP Small-Cap ETF (IJR): Tracks the SP U.S. Universal Small-Cap Index, providing exposure to smaller-cap stocks. Vanguard FTSE Developed Markets ETF (VEA): Offers exposure to developed market stocks outside the U.S. Vanguard FTSE Emerging Markets ETF (VWO): Provides exposure to emerging market stocks. iShares MSCI EAFE ETF (EFA): Tracks the MSCI EAFE index, offering exposure to developed markets outside North America. iShares MSCI Emerging Markets ETF (EEM): Tracks the MSCI Emerging Markets index, providing exposure to emerging markets.

Fidelity Mutual Funds: Fidelity Total Market Index Fund (FZROX)

For investors interested in a total market mutual fund, FZROX Fidelity ZERO SM Total Market Index Fund is an excellent option. This mutual fund, like VTI, ensures broad exposure to the U.S. stock market without any expense ratio. This makes it a highly cost-effective choice for long-term investors looking for a comprehensive investment in the U.S. stock market.