If you are wondering what is the difference between total stock market fund (like VTSMX) and S&P 500, here is good list. Thanks to Valuethinker from http://www.diehards.org
1. tax efficiency - TSM should be much more tax efficient (because it only has to buy and sell on IPOs, M&A, bankruptcies etc.).
2. lower operating costs - for the same reason as 1, the amount of transactions (and therefore market impact costs and dealing costs and spreads) should be lower for TSM.
3. arbitrariness of the S&P500. This is a list of 'top stocks' chosen by a committee. This means it can be 'gamed'. And it is. It is a profitable hedge fund strategy to buy entry candidates, and short exit candidates, in the weeks leading up to a promotion/demotion announcement.
That performance comes at the expense of holders of the S&P500-- the index fund buys at too high an entry price, and sells at too low an exit price.
(smart index funds fight this, DFA certainly does. But in general, holders of the S&P500 will lose performance against this hedge fund strategy).
4. note the S&P500 doesn't just exclude SCV (or mid cap value), it actually has a marked tilt towards 'large cap growth'. That's in the nature of a capitalisation-weighted index (a dollar of profits in a high growth stock gets a much higher PE ratio, and hence market cap, than a dollar of profits in a 'value' stock).
5. theoretical completeness. If your goal is (as best as possible) to invest in the investable 'universe' of stocks, why eliminate 23% of that universe of stocks, from the start?
Note Burton Malkiel recommended TSM over an S&P500 fund, for reasons similar to above (having recommended S&P500 in the first 6 editions of his book).