FSKAX vs. VTSAX: Comparing Index Fund Giants
When it comes to long-term investing, one of the most popular strategies for many is investing in total stock market index funds. These funds provide broad exposure to the overall stock market, essentially mimicking a country or region’s entire stock market.
The U.S. offers two outstanding total stock market index funds, the Vanguard Total Stock Market Index (VTSAX) and the Fidelity Total Market Index Fund (FSKAX).
In this comprehensive guide, we will deeply examine FSKAX vs VTSAX, comparing their expense ratios, dividend yields, performance, holdings, and more, making it easier for you to decide which one suits your investment portfolio better.
Overview of FSKAX vs VTSAX
On the surface, both FSKAX and VTSAX appear nearly identical - low-cost, highly diversified, passively managed funds that aim to replicate the total U.S. stock market.
FSKAX, managed by Fidelity, was launched in 2011 and seeks to mirror the performance of the Dow Jones U.S. Total Stock Market Index.
VTSAX, offered by Vanguard, was established in 2000, significantly earlier than FSKAX, and traces the CRSP US Total Market Index.
The principal difference between them is the index they track and the brokerage houses they’re offered by.
Expense Ratio Comparison
Talking about costs, FSKAX takes the edge by a slim margin. Fidelity’s FSXKAX comes with an incredibly low expense ratio of 0.015%, among the lowest in the industry.
Meanwhile, Vanguard’s VTSAX, while still very competitively priced, has an expense ratio of 0.04%, slightly higher than FSKAX.
While this difference seems small on paper, it can amount to a substantial mark when projected over the long term and when dealing with large investment sums.
Dividend Yield Comparison
When it comes to dividend yield, both funds offer a similar rate, which is reflective of their holdings.
Both funds represent a broad market index, so they incorporate both high dividend-paying and low or no dividend-paying stocks.
However, the exact yield may fluctuate depending on market conditions and the portfolio’s specific stock composition at any given time.
It’s important to note that while dividends are a nice benefit, they’re not the primary focus of these funds as they are designed for overall capital appreciation.
Holdings Comparison
Both VTSAX and FSKAX hold a comprehensive portfolio of US stocks that span all sizes and sectors. VTSAX holds over 3,950 stocks, while FSKAX follows close by with over 3,970 stocks (as of November 12, 2023).
In terms of sector allocation, FSKAX and VTSAX have a similar structure with large allocations in sectors like technology, consumer discretionary, and healthcare. However, slight variations in sector allocation can impact their respective performance slightly under different market conditions.
Performance Comparison
Historically, both funds have shown similar performance, delivering average annual returns that closely number the overall U.S. market. However, market conditions might slightly tip the scale in favor of one or the other.
For instance, should smaller- and mid-cap stocks outperform, a fund with a higher allocation to these stocks may edge out. On the other hand, if large-cap stocks, particularly those in the technology sector, continue their robust performance, a fund with a higher allocation to the technology sector may perform slightly better.
Investors should consider their risk tolerance and investment goals to make a more informed decision.
Which is Better For You?
The choice between FSKAX and VTSAX primarily rests on two factors - your preferred brokerage house and your feelings about the fine details, like slight differences in sector allocations or the marginally lower expense ratio of FSKAX.
Should you prefer Vanguard’s investment philosophy and customer service, then VTSAX is a great choice. Similarly, if you like Fidelity’s platform and its slightly smaller expense ratio, FSKAX is an excellent option.
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FAQ
Is FSKAX a good index fund?
Yes, FSKAX is an excellent index fund. By mirroring the Dow Jones U.S. Total Stock Market Index, it provides investors with broad exposure to U.S. stocks of all sizes. Additionally, it comes with a very low expense ratio and no minimum initial investment requirement, presenting an accessible investment option for both new and seasoned investors.
What is Fidelity’s equivalent of VTSAX?
Fidelity’s equivalent of VTSAX is FSKAX, the Fidelity Total Market Index Fund. Just like VTSAX, FSKAX aims to provide a comprehensive representation of the entire U.S. stock market.
What ETF is comparable to FSKAX?
Fidelity’s equivalent ETF for FSKAX is ITOT - iShares Core S&P Total U.S. Stock Market ETF, which provides similar exposure to the total U.S. stock market.
