VTSAX vs VTI: What's the Difference? (2024)

From an investing perspective, there are two schools of thought.

There are active investors who try to find the needles (winning stocks) in the haystack (stock market).

And then there are passive investors who just buy the whole haystack.

One of the most effective ways of buying the whole haystack is through investment funds such as VTSAX & VTI that are indexed to the stock market.

With that being said, what are the differences between VTSAX vs VTI?

VTSAX vs VTI: An Overview

Below is a high-level summary detailing both funds:

From the above above table, we can see that VTSAX and VTI are identical in Asset Class, Category, # of Stocks & Fund Total Net Assets.

What’s more interesting are the differences between the two investment funds:

• VTSAX is a mutual fund whereas VTI is an exchange traded fund (ETF)
• VTSAX has a minimum investment threshold whereas VTI does not
• VTI has over-performed VTSAX by 0.37% since inception
• VTSAX is 0.01% more expensive than VTI

Let’s now explore these key differences in more detail.

VTSAX vs VTI: Two Different Types of Funds

The largest difference between VTSAX and VTI is that they each represent a different investment class.

VTSAX is a mutual fund while VTI is an ETF.

Mutual funds and ETFs are identical in the fact that they are both investment funds aligned with a particular investing strategy. In this case, they are both investing in the U.S. Stock Market.

While the investing strategy is the same between the two funds, they do differ in some respects such as:

• ETFs can be traded throughout the day whereas mutual funds only exchange hands once a day
• ETFs do not have minimum investment limitations whereas mutual funds do
• We can’t automate ETF investments whereas we can automate mutual fund investments

Because of the $3,000 investment minimum required for VTSAX, it is much easier to start investing with VTI due to the lower barrier for entry. However, if we’d much rather invest in mutual funds, we can always start investing into VTI with the intent to then covert those shares to VTSAX once we’ve hit the $3,000 investment minimum.

Regardless of whether we prefer ETFs or mutual funds, either VSAX or VTI would be an acceptable fund when building a Vanguard 3 Fund Portfolio.

VTSAX vs VTI: Differences in Performance & Dividends

Let’s visualize VTSAX vs VTI when it comes to overall fund performance:

As we can see, there is no noticeable difference in returns between the two funds. To drive this point home further, here’s another visualization showing the % difference in returns between both funds:

Over this 14 year time period, the greatest % difference in returns between the two funds is 0.04%.

With that being said, we can find a much larger difference between VTSAX vs VTI when looking at the dividend payment history.

Here is a visualization looking at 10 years of dividend history between the two funds:

Now that is a big difference!

Looking at both funds’ yearly dividend payouts over the last 10 years, VTI has had a 107% greater dividend payout over VTSAX on average.

As a result, dividend payouts represent one of the largest differences between VTSAX vs VTI.

VTSAX vs VTI: Difference in Fees

One of the most important aspects of investing is understanding the fees associated with an investment.

That is because fees can compound over time and have the ability to make a significant dent in any investments’ returns.

With that all that being said, VTSAX and VTI have some of the lowest expense ratios in the industry.

And while technically VTSAX is slightly more expensive than VTI (by 100th of 1 percent) the difference is almost microscopic in terms of its impact on total returns.

To showcase this minimal difference, let’s create a visualization with the following assumptions:

• One Time Investment of $10K in VTSAX and VTI
• Time Period = 20 Years
• Rate of Return = 10% YoY
• Real Rate of Return = Rate of Return (10%) – Expense Ratio for each Investment

Here is the final result after 20 years (VTI – Blue Line, VTSAX – Orange Line):

But wait – where’s the orange line? I only see the blue line?

That is because in this hypothetical example, the value between both funds is nearly identical.

Here is the performance of both investments in table form:

The 0.01% difference between the expense ratios only led to a difference of $121.58 over the course of 20 years.

In other words, all else being equal, the expense ratios are “essentially identical.” So while VTSAX may be a hair more expensive, it doesn’t represent a significant difference between the two funds.

If you are like me and curious how Vanguard stays in business with such low fees, I wrote a post that goes over all the different ways how Vanguard makes money.

Final Thoughts

At the end of the day, VTSAX and VTI are nearly identical investments in many regards that gives investors an easy and efficient way to buy the U.S. Stock Market haystack 🙂

Thank you for reading! 🙂

_

Full Disclosure: Nothing on this site should ever be considered advice, research or an invitation to buy or sell securities, please see my ‘Terms & Conditions’ page for a full disclaimer.