Key Takeaways
- 1The S&P 500 holds 500 large-cap stocks; total market indexes hold 3,500-4,000+
- 2Performance has been nearly identical over most periods (0.1-0.3% annual difference)
- 3Total market provides additional mid-cap and small-cap exposure
- 4Either is an excellent choice for broad market exposure
- 5Factor investing via individual stock selection can complement both
#S&P 500 Index
The S&P 500 tracks 500 of the largest U.S. companies, selected by a committee based on market cap, liquidity, and profitability.
| Feature | Detail |
|---|---|
| Number of stocks | ~500 |
| Market cap coverage | ~80% of U.S. market |
| Smallest company | ~$10 billion market cap |
| Selection | Committee-based (not purely market cap) |
| Popular ETFs | VOO, SPY, IVV |
| Expense ratio | 0.03% |
#Total Stock Market Index
Total market indexes aim to hold every investable U.S. stock, including mid-cap and small-cap companies.
| Feature | Detail |
|---|---|
| Number of stocks | ~3,500-4,000+ |
| Market cap coverage | ~100% of U.S. market |
| Smallest company | ~$50M market cap |
| Selection | Market cap-weighted, includes (almost) everything |
| Popular ETFs | VTI, ITOT, SWTSX |
| Expense ratio | 0.03% |
#Performance Comparison
The two indexes have tracked each other closely:
| Period | S&P 500 | Total Market | Difference |
|---|---|---|---|
| 10-year annualized | ~12.5% | ~12.3% | ~0.2% |
| 20-year annualized | ~10.8% | ~10.7% | ~0.1% |
| 30-year annualized | ~10.5% | ~10.6% | -0.1% |
Approximate figures — actual returns vary by exact time period
The difference is minimal because the S&P 500 already captures ~80% of total market value.
#When Each Makes Sense
Choose S&P 500 if: - You want exposure to only large, established companies - Simplicity is your priority - You plan to supplement with individual small/mid-cap stock picks
Choose Total Market if: - You want maximum diversification in one fund - You believe in the small-cap premium - You prefer a truly passive approach with zero individual stock selection
Either Way: Both are excellent foundations. The real value-add comes from what you do beyond index investing — which is where factor-based stock selection provides an edge.
Last updated: February 10, 2026