FSKAX vs. FXAIX - Which is Best For You?
Two popular index funds for investors are the Fidelity Total Market Index Fund (FSKAX) and the Fidelity 500 Index Fund (FXAIX).
Both are considered top picks due to their broad market exposure. However, FSKAX tracks the total stock market, while FXAIX tracks the top 500 U.S. large-cap stocks.
Key Characteristics of FSKAX and FXAIX
Both funds do not have a minimum investment.
FSKAX tracks the total stock market.
FXAIX tracks the S&P 500
Both funds have an expense ratio of 0.015%.
FSKAX: Fidelity Total Market Index Fund
FSKAX is designed to offer exposure to the entire U.S. equity market, including small, mid, and large-cap corporations. It does so by replicating the performance of the Dow Jones U.S. Total Stock Market Index, a comprehensive benchmark that represents all U.S. publicly traded companies.
FXAIX: Fidelity 500 Index Fund
FXAIX aims to deliver returns in line with the S&P 500 Index, consisting of approximately 500 large-cap U.S. corporations. The fund represents a majority of the total market capitalization of the U.S. market.
Performance Comparison
Both FSKAX and FXAIX have similar long-term returns due to the significant overlap in their holdings.
However, their performance can slightly differ depending on the market conditions.
In a bull market, where large-cap stocks tend to perform well, FXAIX could deliver a higher return, while FSKAX may outperform during a market recovery or in a steadily growing market due to its diversification into all companies.
Dividend Comparison
Both funds offer quarterly dividends and have a similar yield of around 1.55% due to their holdings’ substantial overlap.
The exact dividend yield changes according to each quarter’s profits and the existing market conditions.
However, historically, both FSKAX and FXAIX have provided comparable dividend returns to their investors.
Expense Ratio Comparison
Both FSKAX and FXAIX are renowned for having some of the lowest expense ratios in the industry.
They both have an expense ratio of just 0.015%, providing great value to the investors and leaving more of the returns in your pocket.
Volatility Comparison
While both FSKAX and FXAIX invest primarily in large-cap stocks, FSKAX has additional exposure to small and mid-cap stocks. These stocks are often more volatile, potentially leading to slightly higher volatility for FSKAX relative to FXAIX.
Which is Better for Your Portfolio?
FSKAX and FXAIX both offer exposure to a broad range of US stocks at extremely low costs, making them appealing to many investors.
FXAIX is best for those looking for exposure to established companies, while FSKAX gives exposure to the entire stock market.
Ultimately, the choice is based on personal preference, and you can even add both to your investment portfolio if you truly can’t decide.
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