Vanguard ETFs Battle For Top Spot In 2026 Market

For investors seeking a simple and cost-effective way to gain exposure to the U.S. stock market, two Vanguard exchange-traded funds (ETFs) routinely top the list: the Vanguard S&P 500 ETF (VOO) and the Vanguard Total Stock Market ETF (VTI). Both funds have long been lauded for their investor-friendly features, broad diversification, and rock-bottom fees. But as 2026 unfolds, the debate over which ETF is the better buy is heating up, driven by shifting market dynamics and a renewed focus on the performance of small- and mid-cap stocks.

VOO, as its name suggests, tracks the S&P 500 Index, offering investors a slice of the 500 largest publicly traded companies in the United States. This means heavy exposure to megacap tech titans like Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta Platforms, and Tesla. The fund’s popularity is no surprise—these companies have led the charge in recent years, especially during the tech- and artificial intelligence-fueled bull run that has defined much of the past half-decade. According to The Motley Fool, the S&P 500 ETF delivered an average annual return of 14.45% over the past five years as of January 13, 2026, outpacing many peers and reinforcing its reputation as a reliable large-cap vehicle.

Yet, VTI takes a broader approach. While it includes all the S&P 500 stocks, it also casts a much wider net, holding more than 3,500 additional stocks across the large-cap, mid-cap, and small-cap spectrum. This expanded coverage gives investors exposure to segments of the market that often fly under the radar but can offer outsized returns in the right conditions. The tradeoff? During periods when large caps dominate, as they have recently, VTI’s inclusion of smaller companies has acted as a performance drag. Over the same five-year period, VTI returned an average of 13.05% annually—respectable, but trailing its S&P 500-focused sibling.

However, the early months of 2026 have brought a subtle shift. The Total Stock Market ETF has started the year strong, outpacing the S&P 500 ETF by a margin of 2.11% to 1.74% year to date, according to The Motley Fool. This reversal suggests that small- and mid-cap stocks, long left in the shadows of their larger counterparts, may finally be getting their moment in the sun. For investors who believe in the long-term value and cyclical resurgence of smaller companies, this could be a compelling reason to consider VTI.

Of course, cost remains a major selling point for both funds. In classic Vanguard fashion, both VOO and VTI carry minuscule expense ratios of just 0.03%. That translates to just $3 in fees for every $10,000 invested each year—a level of affordability that’s hard to beat in the world of asset management. This low-cost structure has helped both ETFs attract billions in assets and cultivate a loyal following among individual and institutional investors alike.

Speaking of institutional investors, recent filings highlight a flurry of activity in VOO. According to MarketBeat, Arkadios Wealth Advisors holds a substantial $25.19 million stake in the ETF. Other players, such as Quaker Wealth Management LLC, have dramatically increased their positions—Quaker’s holdings in VOO jumped by 248.4% in the second quarter, while Front Row Advisors LLC boosted its stake by a staggering 900%. Even smaller firms like Bernard Wealth Management Corp. and Corundum Trust Company INC have entered the fray, acquiring new positions worth tens of thousands of dollars. Bay Harbor Wealth Management LLC, for its part, upped its stake by 800% in the same period. Such moves underscore the enduring appeal of VOO as a core portfolio holding, especially for those seeking broad, large-cap exposure with minimal fuss.

On the performance front, VOO opened at $636.09 on January 20, 2026, with a 52-week low of $442.80 and a high of $640.16. Its market capitalization sits at a hefty $851.23 billion, and with a price-to-earnings ratio of 24.97 and a beta of 1.00, it offers a blend of stability and growth potential. Over the past five days as of January 20, VOO has slipped a modest 0.04%, but over the course of 2025, it surged 14.7%. According to TipRanks, VOO is rated a "Moderate Buy" by ETF analysts, with an average price target of $746.80—implying a potential upside of 17.40%. Its Smart Score stands at eight, signaling that it’s likely to outperform the broader market.

What about dividends? VOO pays out quarterly, distributing the dividends it receives from its underlying S&P 500 holdings. The payout amount can fluctuate from quarter to quarter, reflecting the ebb and flow of corporate dividends. Investors can opt to receive these payments as cash or reinvest them automatically to purchase more shares, making it a flexible choice for both income seekers and those focused on compounding returns.

Despite the strong case for VOO, some analysts still prefer the broader diversification offered by VTI. As The Motley Fool’s David Dierking puts it, "I think the Vanguard Total Stock Market ETF is the better buy. I prefer its broader diversification and exposure to smaller companies. The fact that the market is beginning to recognize some of their value and has been out of favor for so long suggests some added upside potential." He argues that while small caps have lagged in recent years, their inclusion can help spread out risk and potentially enhance long-term returns—especially if the current momentum shift continues.

Still, it’s important to recognize that both VOO and VTI are fundamentally sound choices for long-term investors. Their low fees, broad market coverage, and strong track records make them attractive building blocks for any diversified portfolio. The decision between them ultimately boils down to personal preference: do you want the pure, large-cap exposure of the S&P 500, or the added diversification (and potential volatility) that comes with including small- and mid-cap stocks?

For those looking for even more targeted ideas, The Motley Fool’s Stock Advisor team recently revealed its top 10 stock picks for 2026—none of which included VOO or VTI, but which have historically delivered market-crushing returns. As of January 17, 2026, Stock Advisor’s total average return stood at a staggering 955%, compared to 196% for the S&P 500. That kind of outperformance is enough to turn heads, though it’s worth noting that such results come with their own risks and require careful research.

In a market that’s always evolving, the best approach may be to blend both strategies: anchor your portfolio with low-cost, broad-based ETFs like VOO or VTI, and supplement with carefully chosen individual stocks or sector funds as your convictions dictate. After all, as the early days of 2026 have shown, fortunes can shift quickly—and staying diversified is often the surest way to weather the storm and seize new opportunities as they arise.

With both ETFs continuing to attract investor interest and deliver compelling results, the choice between VOO and VTI remains as relevant—and nuanced—as ever for those looking to build wealth in America’s stock market.