Over the past few years, many investors have relied heavily on Vanguard S&P 500 ETF (NYSE: VOO). The reason is obvious: Its concentration in big tech companies ensured it was able to capture the rebound in artificial intelligence (AI) and outperform nearly every other area of the market. Plus, its 0.03% expense ratio means you get to keep almost all of your returns.
However, things look different in 2026. Technology no longer dominates. The market is expanding. This raises the question of whether this ETF is still the best choice for investors.
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In my opinion there is a better option: Vanguard Total Stock Market ETF (NYSE:VTI).
Due to market weight, technology stocks account for at least 20%. S&P 500 Indexof (SNPINDEX:^GSPC) performance over more than ten years. It peaked at about 36% last year and, even after the recent correction, still accounts for 32% of the index. This creates a lot of concentration risk.
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The top 10 stocks account for a large 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 “Seven Heroes”.
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Technology stock valuations remain high.
That concentration helped investors over the past few years, but now it’s a drag on performance.
The Vanguard Total Stock Market ETF invests in nearly all U.S. stocks, including about 3,000 stocks outside the S&P 500. This broader scale of investment is important for several reasons:
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As conditions change, small and mid-cap stocks have the opportunity to outperform.
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They benefit from the current rotation in technology stocks.
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Earnings growth tends to improve relative to large-cap stocks during recovery cycles.
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Sector exposure is much more balanced than what we see in the S&P 500.
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Performance is no longer so dependent on a few stocks.
Vanguard Total Stock Market ETF currently has about 75% of its assets in large-cap stocks, with the remaining 25% in small- and mid-cap stocks. It’s still cap-weighted, so stocks that are top in the Vanguard S&P 500 ETF are also top in that fund. Concentration in the tech sector isn’t necessarily going away, but the addition of smaller companies can help diversify funds’ exposure to specific industries and economic risk factors.
