VTI's broad-market strategy resulted in a $393,400 shortfall compared to VOO over ten years, as the fund's small-cap holdings failed to keep pace with the S&P 500's concentrated mega-cap performance.
VTI's total-market approach added thousands of small-cap names that lagged the S&P 500, producing a 78.68 percentage point return gap versus VOO over ten years.
VOO's S&P 500 concentration generated 322.10% price return over ten years, beating VTI by 78.68 percentage points.
ITOT offers similar total-market exposure at the same fee but leaves the same small-cap composition drag intact.
SCHB is grouped with broad-market ETFs that carry a comparable long tail of underperforming small caps.
Vanguard's Total Stock Market ETF (VTI) trailed the S&P 500 (VOO) by 78.68 percentage points over the last decade, costing a $500,000 investor roughly $393,400 in potential returns. While both funds share identical 0.03% expense ratios, VTI's inclusion of 3,000 small-cap stocks created a performance drag that diluted exposure to the mega-cap winners driving market growth.
The performance gap is caused by VTI's inclusion of roughly 3,000 small- and mid-cap stocks that underperformed the large-cap companies dominating the S&P 500.