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VTSAX vs VTI (Similarities And Differences: Index Fund Investing)

Looking for VTSAX vs VTI?

Should you invest in VTSAX or VTI?

What are the main similarities and differences?

Keep reading as I have gathered exactly the information that you need!

Let me explain to you the essentials you need to know on VTSAX and VTI!

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Let’s get started!

VTSAX vs VTI Overview

VTSAX is the Vanguard Total Stock Market Index Fund whereas VTI is the Vanguard Total Stock Market ETF.

What Is VTSAX

VTSAX refers to the Vanguard Total Stock Market Index Fund Admiral Shares.

This fund is designed to provide investors access to the entire U.S. equity market.

The fund invests in small-caps, mid-caps, and large-caps selected based on growth and value investing investment strategies.

The VTSAX is a passive index fund allowing it to maintain a low expense ratio resulting in higher returns to investors over time.

The key features attracting investors to VTSAX is its well-diversified portfolio of US stocks, the low cost to manage the fund, and its potential tax efficiency. 

What Is VTI

VTI refers to the Vanguard Total Stock Market ETF.

It was created in 2001 and is a well-diversified exchange-traded fund (ETF) owning different types of US stocks.

The VTI ETF invests in large-, mid-, and small-cap US companies adopting a passive management style based on an index-sampling strategy.

Since the VTI is a passive index fund, it has a low expense ratio allowing the fund to generate higher returns to the investors over time.

The objective of the VTI fund is to track the performance of the CRSP US Total Market Index.

VTSAX vs VTI Performance

VTSAX is a fund that is heavily invested in the US equity market.

Over the years, it has shown a good and consistent return to its investors.

Also, VTI has generated a higher return than the S&P 500 since its inception giving investors access to a well-diversified and market capitalization-weighted index.

Generally speaking, investing in VTI and VTSAX is a safe bet.

Both of these investment options are similar being total stock market index funds allowing investors to be exposed to the US stock market.

They both have similar dividend yields and annual returns.

Voth VTI and VTSAX allow investors to access a well-diversified portfolio and follow a stock market investing approach.

VTSAX vs VTI Benefits And Risks

Overview of Benefits

Investors looking to choose between VTSAX and VTI will find that both of these investment options offer similar benefits.

Both VTI and VTSAX are well-diversified, are passively managed, and offer a low expense ratio.

If you’re looking to start investing in the stock market and want to benefit from immediate diversification in the US equity market, both Vanguard VTI and VTSAX are good options.

The benefit of investing in either VTI or VTSAX is that you will be exposed to less risk compared to investments in individual bonds or stocks. 

Also, from a pure mathematical and statistical perspective, investing in funds and ETFs that match index performance is shown to offer good performance with an investment horizon that is long enough.

If you feel like investing in an individual stock, be sure to do your research to identify one that matches your investment criteria (there is stock research software that you can use for that).

Also, be sure to open a good brokerage account where you can possibly create a virtual portfolio to see how well you do before you jump into stock investing.

Overview of Risks

Investors investing in the VTSAX are exposed to the entire U.S. stock market.

As a result, the market volatility in the broader stock market can affect the value of the VTSAX fund.

If the overall market does well, the fund will do well.

However, if there’s an economic downturn, recession, or adverse market events, the value of the VTSAX fund will also follow suit.

Similarly, investing in VTI does expose the investor to a certain level of risk.

In essence, the VTI ETF is exposed to the overall market risk.

In other words, the value of your investment in VTI can increase to the extent the broader market is doing well.

However, if there’s an overall economic downturn and market volatility, you are likely to see a drop in the value of your investment.

VTSAX vs VTI Similarities And Differences

ETF vs Mutual Fund Real Time Pricing

The first aspect that differences VTI and VTSAX is that VTI is an ETF whereas VTSAX is a mutual fund.

ETFs are traded in a similar way as stocks are traded on the market.

Both ETFs and stocks are priced in real-time allowing investors to buy and sell these securities during the open market hours.

On the other hand, mutual funds are not priced in real time during the stock market open hours but their price is calculated based on the Net Asset Value at the end of the day.

VTSAX vs VTI Minimum Investing

The way you invest in VTSAX and VTI is slightly different.

Since VTI is an ETF, you’ll need to invest your money in such a way allowing you to purchase a certain number of whole shares of VTI.

Just like stocks, you can establish your investing budget, calculate how many whole shares that can represent, and invest (your minimum investment budget is essentially the value of one VTI share).

On the other hand, investing in a mutual fund like VTSAX allows you to invest any nominal value in the fund as you are able to buy fractional shares of the fund.

If you want to invest in VTSAX, you’ll need to be mindful of the fact that you have to respect their minimum investment threshold of $3,000 (which can be a limiting factor for some investors).

VTSAX And VTI Automatic Investing

VTSAX allows you to set up and automatically invest and withdraw from the fund on an ongoing basis whereas you do not have the option with VTI.

If you want to purchase additional shares of VTI, you’ll need to invest manually every time.

VTSAX vs VTI Tax Efficiency

When comparing the VTSAX vs VTI tax efficiency, we can conclude that you may get higher efficiency by investing in VTI.

The reason why VTI has a higher tax efficiency than VTSAX is that it’s an ETF (compared to mutual funds).

Typically, mutual funds and ETFs can be structured as open-ended investments or closed-ended investments.

In most cases, ETFs are closed-ended investments.

This means that the fund issues a fixed number of shares for the public to invest in.

On the other hand, mutual funds can be either open-ended investments (where an unlimited number of shares can be issued to the public) or closed-ended (limited number of shares).

ETFs offer a great tax efficiency than mutual funds as the investor may not need to be exposed to as much capital gains.

When an investor of mutual funds intends to sell, generally the mutual fund will sell some of its underlying assets to provide the investor with the cash equivalent of its investment.

This triggers a capital gain to all investors in the fund.

On the other hand, an ETF is traded from one person to another and so an investor can obtain the cash value of its shares by simply selling the ETF to someone else.

In this case and unlike a mutual fund, the ETF does not have to sell its underlying asset to find the money to pay the investor.

VTSAX vs VTI Expense Ratio

Both the VTSAX mutual fund and VTI ETF have a passive investing approach resulting in low expense ratios.

As of the writing of this post, the expense ratio for VTSAX was 0.04% whereas VTI of 0.03%.

As you can see, the expense ratios are nearly identical and the difference can be negligible from the investor’s point of view.

VTSAX vs VTI Holdings

As of the writing of this post, here are the largest holdings of both VTSAX and VTI:

VTSAX Holdings:

  • Apple Inc.
  • Microsoft Corp.
  • Alphabet Inc.
  • Amazon.com Inc.
  • Tesla Inc.
  • NVIDIA Corp.
  • Meta Platforms Inc.
  • Berkshire Hathaway Inc.
  • JPMorgan Chase & Co.
  • Home Depot Inc.

The VTSAX mutual fund’s portfolio is more heavily invested in the Technology, Consumer Discretionary, Industrials, Health Care, and Financial industries.

VTI Holdings:

  • Apple Inc.
  • Microsoft Corp.
  • Alphabet Inc.
  • Amazon.com Inc.
  • Tesla Inc.
  • NVIDIA Corp.
  • Meta Platforms Inc.
  • Berkshire Hathaway Inc.
  • JPMorgan Chase & Co.
  • Home Depot Inc.

Just like VTSAX, the VTI fund is also heavily invested in Technology, Consumer Discretionary, Industrials, Health Care, and Financial industries.

VTI vs VTSAX Takeaways 

So, there you have it folks!

You are wondering which investment is the better one between VTI and VTSAX?

In essence, both VTSAX and VTI are similar investment options allowing the average investor to generate a good return consistent with the broad US stock market.

By investing in either VTSAX or VTI, you are investing in a slice of the US economy.

Both funds are passively managed giving you low expense ratios that are comparable.

You may find some differences that may impact your choice, such as:

  • VTI prices are established in real time just like stocks whereas VTSAX prices are calculated at the end of the trading day
  • You do not have a minimum investment obligation for VTI whereas you have a $3,000 minimum investment threshold for VTSAX
  • The VTI ETF is a slightly better option from a tax efficiency point of view compared to VTSAX
  • VTSAX is the only investment option that you can set up for automatic withdrawal and investment 

In the end, it comes down to your personal preference to choose between VTI and VTSAX based on their slight differences.

In general, they are both safe investments that have a track record of providing investors with a consistent return.

Good luck with your investing!

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With that being said, let’s head right back to our main topic!

Choosing Between VTSAX vs VTI

  • If you’re looking to invest in either VTI or VTSAX, you are looking at two comparable investment options
  • Both funds offer you a nicely diversified portfolio of US equities tracking the broader stock market, have low expense ratios, and can give you a nice steady return over time
  • Since you are investing to track the stock market, you’re exposed to the inherent risk affecting the economy at large
  • Although you won’t have the ability to invest in an alpha stock that will rise tremendously in value, you will also not be exposed to the risk of losing a lot of value if you were to invest in one single stock
  • As an investor, investing in VTSAX or VTI will provide you with similar risk and reward profiles 
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