VOO Vs. VTI: Which US Stock Market ETF Could Benefit More From Interest Rate Cuts?
Portfolio Pulse from Chris Katje
The article compares two major U.S. stock market ETFs, VOO and VTI, in light of potential interest rate cuts by the Federal Reserve. VOO tracks the S&P 500 Index, while VTI tracks the broader CRSP U.S. Total Market Index, including small-cap stocks. Historically, rate cuts have benefited small-cap stocks, suggesting VTI might see increased inflows. Both ETFs have low expense ratios and have shown different performance metrics over various time frames.
September 18, 2024 | 7:24 pm
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NEUTRAL IMPACT
SPY, similar to VOO, tracks the S&P 500 and has shown strong performance. However, like VOO, it may not benefit as much from rate cuts compared to VTI due to its large-cap focus.
SPY's large-cap focus has led to strong past performance, similar to VOO. However, potential rate cuts are more likely to benefit small-cap stocks, which are less represented in SPY, limiting its short-term upside.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 60
NEUTRAL IMPACT
VOO, tracking the S&P 500, has outperformed VTI and SPY in recent years due to its large-cap focus. However, potential rate cuts may not benefit VOO as much as VTI, which has more small-cap exposure.
VOO's focus on large-cap stocks has led to strong past performance. However, rate cuts typically benefit small-cap stocks more, which are less represented in VOO. This could limit VOO's short-term upside compared to VTI.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
VTI, with its broader market exposure including small-cap stocks, could benefit from potential rate cuts. Historically, small-cap stocks perform well in such environments, possibly leading to increased inflows into VTI.
VTI's inclusion of small-cap stocks positions it well to benefit from rate cuts, which historically favor smaller companies. This could lead to increased investor interest and inflows into VTI.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 80