FXAIX vs. VTSAX: A Comparative Analysis
If you’re considering putting your money in index mutual funds, two options that commonly arise are FXAIX (Fidelity 500 Index Fund) and VTSAX (Vanguard Total Stock Market Index Fund).
This guide will compare FXAIX vs VTSAX, exploring their key attributes to help you decide which is best for you.
FXAIX vs. VTSAX Key Differences
FXIAX tracks the S&P 500
VTSAX tracks the total stock market
VTSAX has a minimum investment of $3,000
FXAIX does not have an investment minimum
FXAIX is a Fidelity fund, while VTSAX is Vanguard
FXAIX has a lower expense ratio than VTSAX
FXAIX Overview: The Fidelity 500 Index Fund
FXAIX, the Fidelity 500 Index Fund, aims to mimic the performance of the S&P 500. Given the S&P 500 represents approximately 80% of the U.S. equities market, investing in FXAIX provides broad exposure to the largest U.S. companies.
VTSAX Overview: The Vanguard Total Stock Market Index Fund
Unlike FXAIX, VTSAX tracks the CRSP US Total Market Index, reflecting the performance of the entire U.S. stock market.
This includes thousands of small, mid, and large-cap companies, offering a wide universe of investments, giving you much more diversity than FXAIX.
VTSAX also requires a minimum investment of $3,000, while FXAIX does not have a minimum investment.
FXAIX vs. VTSAX Expense Ratio Comparison
FXAIX - 0.015%
VTSAX - 0.04%
FXAIX has a slightly lower expense ratio than VTSAX, 0.015% compared to 0.04%.
To an inexperienced investor, this may appear negligible, but the difference can compound into substantial sums over a long investment horizon.
Either way, these expense ratios are much lower than the average, making them both great low-cost options.
FXAIX vs. VTSAX: Dividend Yield Comparison
FXAIX - 1.55%
VTSAX - 1.60%
Both FXAIX and VTSAX pay a similar dividend yield, making it not a significant factor when choosing between these funds.
The yield will fluctuate over time, but since both are broad-market funds, it is not likely to differ a whole lot over time.
FXAIX vs. VTSAX: Holdings Comparison
FXAIX’s holdings focus on large-cap stocks in the S&P 500. This screams stability and growth but may miss out on potential high-fliers in the small to mid-cap spectrum.
VTSAX, given its wider scope, holds large-cap companies alongside budding stars in the small-cap arena, providing a balance between stability and growth aspirations.
FXAIX vs. VTSAX: Performance Comparison
When it comes to performance comparison, FXAIX — by virtue of tracking the S&P 500 — has offered solid returns over the past decades.
However, VTSAX, due to its broader market exposure, has the potential to outperform during periods of small to mid-cap outperformance.
Conversely, in market conditions favoring blue chips or during periods of heightened volatility, FXAIX might edge out.
Which Is Better For You: FXAIX or VTSAX?
The “better” fund depends on your specific circumstances, risk tolerance, and investment goals.
If you prefer stability and only want exposure to established large-cap companies, you might lean toward FXAIX due to its focus on blue-chip companies.
If you prefer a heavily diversified portfolio, VTSAX is likely the better option.
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FAQ
What Is the Fidelity Equivalent to Vanguard VTSAX?
Fidelity’s equivalent to Vanguard’s VTSAX is FSKAX (Fidelity Total Market Index Fund). Similar to VTSAX, FSKAX seeks to imitate the performance of the U.S. stock market. It encapsulates a blend of large, mid, and small-cap companies.
