FAAR vs VTI
First Trust Alternative Absolute Return Strategy ETF vs Vanguard Total Stock Market ETF
Quick Verdict
VTI has a lower expense ratio. VTI delivered stronger 1-year returns. VTI offers more diversification with 2783 holdings.
Side-by-Side Comparison
| Metric | FAAR | VTI | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.03% | |
| AUM | $191M | $663.5B | |
| Dividend Yield | 9.19% | 1.07% | |
| Holdings | 6 | 3,543 | |
| YTD Return | +15.54% | +14.16% | |
| 1Y Return | +20.20% | +23.62% | |
| 3Y Return (annualized) | +9.05% | +21.43% | |
| 5Y Return (annualized) | +7.41% | +12.33% | |
| Volatility (annualized) | 9.1% | 15.3% | |
| Max Drawdown | -18.8% | -56.6% | |
| Fund Family | First Trust Portfolios (US) | Vanguard (US) | |
| Category | Commodity | Equity | |
| Inception | May 18, 2016 | May 24, 2001 |
FAAR vs VTI Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Vanguard Total Stock Market ETF (VTI) is a ETF from Vanguard (US). Over the past year FAAR returned +20.20% while VTI returned +23.62%. Year to date, FAAR is up 15.54% versus a gain of 14.16% for VTI.
Over three years, FAAR compounded at +9.05% per year against +21.43% for VTI; over five years the annualized figures are +7.41% and +12.33% respectively. Across the full 10-year window we track, VTI has the edge at +8.14% annualized vs +3.46%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VTI has been the more volatile fund, with annualized monthly volatility of 15.3% compared with 9.1% for FAAR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -56.6% for VTI. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.11. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while VTI charges 0.03%. On a $10,000 position that is $97 vs $3 annually, a gap of $94 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 1.07% for VTI.
Holdings Overlap
FAAR and VTI share 0 holdings out of 2784 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, FAAR or VTI?
FAAR has an expense ratio of 0.97% while VTI charges 0.03%. VTI is the cheaper option. On a $10,000 investment, that is $94 per year of difference.
Which performed better, FAAR or VTI?
Over the past year FAAR returned +20.20% vs +23.62% for VTI, so VTI leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.46% vs +8.14% for VTI. Past performance does not guarantee future results.
Which is riskier, FAAR or VTI?
VTI has been the more volatile fund at 15.3% annualized versus 9.1% for FAAR. Worst drawdown: FAAR -18.8% vs VTI -56.6%.
Should I hold both FAAR and VTI?
FAAR and VTI have a monthly-return correlation of 0.11, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and VTI?
FAAR and VTI share 0 common holdings with a 0.0% weight overlap. Combined, they hold 2784 unique securities.
Which pays a higher dividend, FAAR or VTI?
FAAR yields 9.19% while VTI yields 1.07%, so FAAR currently pays the higher dividend yield.
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