SPY ETF vs VTI

[Newventurer]

Any thoughts on why one might choose one vs the other? Both seem to be highly liquid and have similar fees (if I am looking at it correctly). Their performance seems to be very similar this year even though VTI is a broader index.

Thanks

 

[target2019]

Vanguard TSM is now based on this index:
CRSP U.S. Total Market Index | CRSP - The Center for Research in Security Prices

SPY is just the largest 500 companies.

 

[VanWinkle]

Any thoughts on why one might choose one vs the other? Both seem to be highly liquid and have similar fees (if I am looking at it correctly). Their performance seems to be very similar this year even though VTI is a broader index.

Thanks

The performance is similar to date. The idea is that VTI includes more
mid caps and small caps for diversification. This is also thought to lead to
higher returns over long time periods(over 20-40 years). Nobody knows
for sure what will happen.

 

[OldShooter]

SPY is a sector fund. It is not passive investing. If you want passive, buy everything including international.

If you want to make sector bets, buy whatever you like.

 

[target2019]

"Nearly 4,000 constituents across mega, large, small and micro capitalizations, representing nearly 100% of the U.S. investable equity market, comprise the CRSP US Total Market Index."

There's a breakdown chart of the constituents on this page:
https://www.bogleheads.org/wiki/CRSP_equity_indexes

 

[ERD50]

SPY is a sector fund. It is not passive investing. If you want passive, buy everything including international.

If you want to make sector bets, buy whatever you like.

SPY is a BIG, BROAD 'sector' though. Of course you are technically right, the S&P 500 is narrower than VTI, and I've been moving from SPY to VTI for that reason (when convenient), but I really don't think the difference in breadth is worth worrying about.

Go here, select ALL in the timeline - they track super close.

https://stockcharts.com/freecharts/perf.php?SPY,vti

-ERD50

 

[OldShooter]

SPY is a BIG, BROAD 'sector' though. Of course you are technically right, the S&P 500 is narrower than VTI, and I've been moving from SPY to VTI for that reason (when convenient), but I really don't think the difference in breadth is worth worrying about.

Go here, select ALL in the timeline - they track super close.

https://stockcharts.com/freecharts/perf.php?SPY,vti
...

All true. The S&P 500 has been about 80% of the US market cap (maybe changed in the past week or two?) and about 40% of the world market cap. So it is more representative of the US market than it is of the world market and in recent years it has probably been the main engine driving US returns. That's why you see them track in recent times. In recent times, too, international stocks have not done well but to the proponents of passive investing this is no big deal. Here is Kenneth French on the subject of home country bias: https://famafrench.dimensional.com/videos/home-bias.aspx I buy his logic, so we are about 50/50 US and international, expecting that at some point the international investments will revert to the mean. YMMV of course.

 

[youbet]

- they track super close.


-ERD50

Yep. Of all the paths one could follow in investing a FIRE portfolio, the difference between SPY and VTI performance over the long term is pretty close to inconsequential.

I own both because I couldn't make up my mind early on. Now, LTCG's, and their tax consequences, would make it expensive to consolidate.

Said another way:

The choice between going with actively managed funds vs index funds could have large consequences. It's likely to matter.

The choice between going with VTI vs SPY is very unlikely to have a significant consequence. It's unlikely to matter very much years down the road, if the future resembles the past.