Author Topic: Total Stock Market vs. S&P 500  (Read 1761 times)

Gatzbie

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Total Stock Market vs. S&P 500
« on: November 07, 2020, 11:25:28 AM »
Hello All,

I made a large adjustment to my portfolio this week. Exchanged 100% VTSAX (Total Stock Market) to 65% VFIAX(S&P 500 - 401k/IRA accounts) 35% VTSAX (Taxable account).

Reason: After the Corona drop, I realized I was unable to TLH my losses in my brokerage account as I had substantially identical funds in my IRA/401k accounts.

Noticed over past few days that sometimes VTSAX performs better or goes down a little more than VFIAX. In the long term, typically will these funds perform so similar that this won't matter much?

I preferred my portfolio being in the Total Stock Market for more diversification but was thinking being able to TLH on future market crashes might be more beneficial. Am a bit concerned because most of my future contributions will be going to S&P 500 in my tax-advantaged accounts.





MDM

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Re: Total Stock Market vs. S&P 500
« Reply #1 on: November 07, 2020, 02:59:43 PM »
In the long term, typically will these funds perform so similar that this won't matter much?
Historically, yes.  Will they?  Probably....

E.g., see VFIAX vs VTSAX (Comparison).

secondcor521

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Re: Total Stock Market vs. S&P 500
« Reply #2 on: November 07, 2020, 04:14:53 PM »
VTSAX and VFIAX overlap about 80-85%.  They both own the S&P500.  VTSAX also owns the smallest (by market cap) 10-20% of the market.  So that's the difference between the two.  Note that although the difference seems large by number of ticker symbols, it's not that big in dollar terms since the smallest companies in the stock market are much smaller than the largest companies in the stock market.

On any given day, small caps can outperform or underperform midcaps and large caps, and you should see VTSAX outperform or underperform VFIAX in a similar fashion.  The only difference is that I think the dividend dates are a few days off between the two funds, so you might see some differences in expected behavior around the last few days of March, June, September and December when that happens.

Long term, the two funds should perform pretty much exactly the same.

MustacheAndaHalf

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Re: Total Stock Market vs. S&P 500
« Reply #3 on: November 10, 2020, 12:51:37 AM »
Yesterday, tech stocks dropped while Covid stocks soared.  Small cap beat large cap... so you might expect a total market ETF (VTI) to perform better than an S&P 500 ETF (VOO) with more large cap exposure.  But actually, VTI is up 1.19% while VOO is up 1.25%.  A very dramatic day, with very similar results.

habanero

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Re: Total Stock Market vs. S&P 500
« Reply #4 on: November 10, 2020, 12:58:04 AM »
You have bit of the same with the MSCI World Index and the MSCI All Countries World Index. The former also includes emerging markets, so even if if the former excludes a large part of the world their performance is almost identical over time as the vast majority of what they own overlap.

They diverge slightly during periods were emerging markets massively out-/underperform, but in the long run its a pretty big meh,

 

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