Over the past few years, a lot of investors have relied heavily on the Vanguard S&P 500 ETF (NYSEMKT: VOO). It’s clear why: Its megacap tech concentration has ensured that it’s capturing the artificial intelligence (AI) rally and outperforming almost every other area of the market. Plus, its 0.03% expense ratio means you keep almost all of the returns.
2026, however, is looking different. Tech is no longer dominating. The market is broadening out. That raises the question of whether this ETF is still the best choice for investors.
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In my opinion, there’s a better option: the Vanguard Total Stock Market ETF (NYSEMKT: VTI).
Because of market weighting, Tech stocks have accounted for at least 20% of the S&P 500‘s (SNPINDEX: ^GSPC) performance for more than a decade. It peaked at around 36% last year and, even after the recent correction, is still 32% of the index. That creates a lot of concentration risks.
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The top 10 holdings make up a significant share of the S&P 500, currently around 36%.
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Technology and growth stocks still dominate.
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Returns rely heavily on the “Magnificent Seven.”
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Valuations in tech stocks remain elevated.
That concentration has helped investors over the past few years, but it’s causing a performance drag today.
The Vanguard Total Stock Market ETF invests in virtually every U.S. stock, including about 3,000 of them not in the S&P 500. That broader exposure matters for a few reasons:
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Small- and mid-caps have the opportunity to outperform as conditions change.
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They’ve benefited from the current rotation away from tech stocks.
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Earnings growth tends to improve relative to large caps in recovery cycles.
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Sector exposure is much more balanced compared to what we see in the S&P 500.
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Performance becomes less dependent on a handful of stocks.
The Vanguard Total Stock Market ETF currently has about 75% of its assets in large caps and the remaining 25% in mid- and small caps. It’s still market cap-weighted, so the same stocks that top the Vanguard S&P 500 ETF also top this fund. The tech concentration doesn’t necessarily disappear, but the addition of smaller companies helps diversify the fund’s exposure to specific sectors and economic risk factors.
