For beginner investors, it can become overwhelming to pick the right investment product. Considering the thousands of options flooding the market, one has to carefully pick investments based on one’s goals and investment horizon. What combo works for you may not work for someone else.
A Redditor recently asked whether they should switch their funds from Vanguard S&P 500 ETF (NYSEARCA:VOO | VOO Price Prediction) to Vanguard Total World Stock ETF (VT) for higher long-term returns. While both Vanguard ETFs are great investment options, one has to carefully choose a fund based on their current financial position. He is confused about whether to sell VOO shares and switch to VT or keep the VOO investment and invest new funds in VT. I’d recommend latter.
Diversification is the key
If you want to make the most of your investments, diversification is the key. You can diversify your portfolio by holding your investments in VOO and allocating the new investments in VT. VOO holds about 500 stocks, while VT holds close to 10,000 stocks, offering ultimate diversification.
VOO offers a strong foundation by investing in the biggest U.S. companies. It is inclined towards the technology sector with over 30% allocation. The top 10 holdings are the biggest tech giants driving the market today.
On the other hand, VT invests in global companies and allows you to own stocks in companies across the Middle East, the Pacific, Europe, and emerging markets. About 60% of the fund is invested in North America, and the remainder is invested across 30+ countries.
|
ETF |
VOO |
VT |
|
NAV |
$610.71 |
$137.41 |
|
Expense Ratio |
0.03% |
0.06% |
|
Yield |
1.16% |
1.71% |
|
Stocks held |
504 |
9990 |
Minimize costs
Operating expenses are a part of every ETF investment you make, and smart investors must compare the expense ratio before putting their money in a fund. Before you invest in VT, consider and compare the expense ratios of both the funds.
VOO has an expense ratio of 0.03%, much lower than the average expense ratio of 0.74% in the industry. On the other hand, VT has an expense ratio of 0.06%. This means, for every $10,000 invested, you pay $6 as a fee. Since both the funds have low expense ratios, you’ll take home the most of your returns.
Research historical performance
Vanguard has excellent ETF options to choose from, and while historical performance doesn’t guarantee future results, it helps to understand and compare before making a decision.
VOO has a yield of 1.16% and has generated a cumulative return of 70.63% in 3 years, 98.56% in 5 years, and 289.40% in a decade. The return since inception is an impressive 680.60%.
On the other hand, VT has a yield of 1.71% and offers capital growth potential. It has generated a cumulative return of 62.28% in 3 years, 77.11% in 5 years, and 188.13% in a decade. Its return since inception is 286.60%.
When comparing the two, VOO fares better than VT in terms of cumulative returns and dividends. As of 2025, VOO is up 13.71% while VT is up 17.27%.
VOO and VT are great ETFs to add to your portfolio. You can continue holding your investment in VOO but start putting new funds into VT for global diversification. Do remember to assess your investment goals and risk tolerance before you make any changes to your portfolio.
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