Fund Comparison

The Schwab S&P 500 Index Fund (SWPPX) and the Blackrock iShares Core S&P Total US Stock Market ETF (ITOT) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. SWPPX and ITOT form the core of many investor portfolios and many investors compare SWPPX vs ITOT in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

There are two main differences between the funds. SWPPX is a mutual fund that holds large-caps and mid-caps, while ITOT is a total market ETF that includes small-caps. However, these are not major differences and investors should look at additional factors when deciding between the two funds.

The Longer Answer

Historical Performance: SWPPX vs ITOT

SWPPX was launched in 1997, while ITOT was launched in 2004. Since their common inception date, the performance difference has only been .1%! This difference has compounded over time and the cumulative performance differential over this time period is just over 8%.

Selecting SWPPX vs ITOT is (at least partially) a bet on whether large-caps or small-caps will outperform in the future (although even a correct prediction will not make much of a difference since performance is pretty similar).

Portfolio Exposures: SWPPX vs ITOT

Geographic Exposure

Both SWPPX and ITOT hold essentially 100% stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

SWPPX tracks the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. ITOT tracks the broader CRSP U.S. Total Stock Market Index and so it owns many more mid-caps and small-caps. In other words, SWPPX is a large-cap vehicle and ITOT is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly weighted towards large-caps.

	SWPPX	ITOT
Large-Cap	83%	72%
Mid-Cap	16%	19%
Small-Cap	0%	9%

Sector Weights

Despite the differences in market cap exposures, the sector exposures between the two funds is nearly identical as shown below.

	SWPPX	ITOT
Basic Materials	2.46%	2.72%
Consumer Cyclical	9.56%	10.72%
Financial Services	13.89%	14.04%
Real Estate	2.81%	3.59%
Communication Services	7.28%	7.22%
Energy	5.23%	4.85%
Industrials	9.06%	9.61%
Technology	23.02%	23.60%
Consumer Defensive	7.61%	6.48%
Healthcare	15.90%	14.40%
Utilities	3.18%	2.76%

Factors to Consider

Expenses

Some investors may point out that the expense ratios between SWPPX and ITOT differ. This is true, but at a certain level, differences in expense ratio do not matter that much. In this case, the ITOT’s expense ratio of .03% is 50% higher than SWPPX’s .02% expense ratio. However, we’re talk about 1 basis points, so even though ITOT is 50% more expensive than SWPPX, it is inconsequential.

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Schwab. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX or ITOT. However, only ITOT is free to trade in many non-Schwab accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for ITOT and individual investor trades will not generally be large enough to “move” the market. In the case of ITOT, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). SWPPX is an index fund and relatively tax-efficient. However, it has made capital gains distributions in the past and I would expect this to continue in future. ITOT has never paid out a capital gain distribution, nor do I expect it to in the future. Thus, ITOT is more tax-efficient.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously. However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards SWPPX. If all ETFs, I might lean more towards ITOT.

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for ITOT is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts on SWPPX vs ITOT

Both SWPPX and ITOT are large, core funds sponsored and managed by respectable asset managers (Schwab and Blackrock iShares, respectively). Although SWPPX is more of a large-cap mutual fund and ITOT is a total market ETF, performance has been extremely similar. ITOT has an edge in tradability and tax-efficiency, but these funds are effectively interchangeable in most other respects.

I would not spend too much energy splitting hairs to decide which one is “better” (unless one has a clear view on whether larger caps or smaller caps will perform better in the future and even then the difference won’t be much)! In my opinion, both funds are among the best out there and investors cannot really go wrong with either.

The Schwab S&P 500 Index Fund (SWPPX) and the Schwab US Broad Market ETF (SCHB) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. SWPPX and SCHB form the core of many investor portfolios and many investors compare SWPPX vs SCHB in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

There are two main differences between the funds. SWPPX is a mutual fund that holds large-caps and mid-caps, while SCHB is a total market ETF that includes small-caps. However, these are not major differences and investors should look at additional factors when deciding between the two funds.

The Longer Answer

Historical Performance: SWPPX vs SCHB

SWPPX was launched in 1997, while SCHB was launched in late 2009. Since their common inception date, the performance difference has only been .17%! This difference has compounded over time, although the cumulative performance differential over this time period has been less than 10%.

Much of this performance difference was driven by large caps’ outperformance over the past decade. Selecting SWPPX vs SCHB is (at least partially) a bet on whether large-caps or small-caps will outperform in the future (although even a correct prediction will not make much of a difference since performance is pretty similar).

Portfolio Exposures: SWPPX vs SCHB

Geographic Exposure

Both SWPPX and SCHB hold essentially 100% stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

SWPPX tracks the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. SCHB tracks the broader Dow Jones US Broad Market Index and so it owns many more mid-caps and small-caps. In other words, SWPPX is a large-cap vehicle and SCHB is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly weighted towards large-caps.

	SWPPX	SCHB
Large-Cap	83%	72%
Mid-Cap	16%	19%
Small-Cap	0%	8%

Sector Weights

Despite the differences in market cap exposures, the sector exposures between the two funds is nearly identical as shown below.

	SWPPX	SCHB
Basic Materials	2.46%	2.66%
Consumer Cyclical	9.56%	10.70%
Financial Services	13.89%	13.99%
Real Estate	2.81%	3.55%
Communication Services	7.28%	7.51%
Energy	5.23%	4.70%
Industrials	9.06%	9.53%
Technology	23.02%	24.05%
Consumer Defensive	7.61%	6.40%
Healthcare	15.90%	14.19%
Utilities	3.18%	2.71%

Factors to Consider

Expenses

The expense ratios of SWPPX and SCHB are both identical and incredibly low at .02%!

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Schwab. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX or SCHB. However, only SCHB is free to trade in many non-Schwab accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for SCHB and individual investor trades will not generally be large enough to “move” the market. In the case of SCHB, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). SWPPX is an index fund and relatively tax-efficient. However, it has made capital gains distributions in the past and I would expect this to continue in future. SCHB has never paid out a capital gain distribution, nor do I expect it to in the future. Thus, SCHB is more tax-efficient.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously. However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards SWPPX. If all ETFs, I might lean more towards SCHB.

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for SCHB is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts on SWPPX vs SCHB

Both SWPPX and SCHB are large, core funds sponsored and managed by Schwab. Although SWPPX is more of a large-cap mutual fund and SCHB is a total market ETF, performance has been extremely similar. SCHB has an edge in tradability and tax-efficiency, but these funds are effectively interchangeable in most other respects.

I would not spend too much energy splitting hairs to decide which one is “better” (unless one has a clear view on whether larger caps or smaller caps will perform better in the future and even then the difference won’t be much)! In my opinion, both funds are among the best out there and investors cannot really go wrong with either.

The Schwab S&P 500 Index Fund (SWPPX) and the Fidelity S&P 500 Index Fund (FXAIX) are two of the largest S&P 500 index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and FXAIX track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare SWPPX vs FXAIX in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

There are not many differences between SWPPX and FXAIX. Therefore, investors should consider factors beyond the underlying portfolios (which are essentially identical) in order to decide which fund is best for them.

The Long Answer

Historical Performance: SWPPX vs FXAIX

FXAIX was launched 1988, while SWPPX was launched in May 1997. Since their common inception date the two funds have performed identically, with a difference of just .01% annually! The cumulative performance difference between these two funds has been just over 3% (over a 25 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs FXAIX

Both SWPPX and FXAIX track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Expenses

Some investors may point out that the expense ratios between SWPPX and FXAIX differ. This is true, but at a certain level, differences in expense ratio do not matter that much. In this case, the SWPPX’s expense ratio of .02% is 33% higher than the expense ratio of FXAIX’s .015%. However, we’re talk about half a basis point (or .005%), so even though SWPPX is 33% more expensive than SWPPX, its inconsequential.

Transaction Costs

Many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX.

Similarly, Fidelity does not participate in pay-to-play arrangements, so FXAIX trades are likely to incur a fee at any custodian besides Fidelity.

Investors looking for free trades may want to consider an S&P 500 ETF, such as VOO, SPY, SPLG, or IVV.

Tax Efficiency & Capital Gain Distributions

Both funds are relatively tax-efficient, since they are index funds. However, they both regularly make capital gains distributions and I would expect this to continue. Investors looking for a more tax-efficient vehicles of taxable accounts may want to consider using an ETF.

Tax Loss Harvesting

Investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

Neither FXAIX nor SWPPX have a stated minimums for purchases, although some brokerages (especially competitors of Schwab/Fidelity) impose minimums. Again, using an ETF equivalent of either of these funds may make sense.

Final Thoughts: SWPPX vs FXAIX

Both SWPPX and FXAIX are large, core funds sponsored and managed by Schwab and Fidelity respectively. Performance has been nearly identical. I view these two funds as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. So I might select SWPPX or FXAIX solely based on where my account is held. Despite these considerations, these two funds are very similar for all intents and purposes.

The Schwab S&P 500 Index Fund (SWPPX) and the Vanguard S&P 500 Index Fund (VFIAX) are two of the largest S&P 500 index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and VFIAX track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare SWPPX vs VFIAX in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

There are not many differences between SWPPX and VFIAX. Therefore, investors should consider factors beyond the underlying portfolios (which are essentially identical) in order to decide which fund is best for them.

The Long Answer

Historical Performance: SWPPX vs VFIAX

SWPPX was launched 1997, while VFIAX was launched on November 13, 2000. Since then the two funds have performed identically, with a difference of just .04% annually! The cumulative performance difference between these two funds has been just over 3% (over a two decade timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs VFIAX

Both SWPPX and VFIAX track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Expenses

Some investors may point out that the expense ratios between SWPPX and VFIAX differ. This is true, but at a certain level, differences in expense ratio do not matter that much. In this case, the VFIAX’s expense ratio of .04% is double the expense ratio of SWPPX’s .02%. However, we’re talk about 2 basis points, so even though VFIAX is 100% more expensive than SWPPX, its inconsequential.

Transaction Costs

Many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX.

Similarly, Vanguard does not participate in pay-to-play arrangements, so VFIAX trades are likely to incur a fee at any custodian besides Vanguard.

Investors looking for free trades may want to consider an S&P 500 ETF, such as VOO, SPY, SPLG, or IVV.

Tax Efficiency & Capital Gain Distributions

SWPPX has made capital gains distributions in the past and I would expect this to continue in future. VFIAX has not made a capital gain distribution since 2000 and I do not expect it to in the future due to the way that Vanguard structures its ETFs. Thus, tax-sensitive investors may favor VFIAX or an S&P 500 ETF.

Tax Loss Harvesting

Investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for VFIAX is $3,000, regardless of where it is bought or sold.

Final Thoughts: SWPPX vs VFIAX

Both SWPPX and VFIAX are large, core funds sponsored and managed by Schwab and Vanguard respectively. Performance has been nearly identical. I view these two funds as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. So I might select SWPPX or VFIAX solely based on where my account is held and whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

The Vanguard S&P 500 Index ETF (VOO) and the Vanguard Total Stock Market ETF (VTI) are two of the largest ETFs and both are sponsored by Vanguard. VOO and VTI are a core holding of many investor portfolios and many investors compare VOO vs VTI in order to decide which should be the foundation of their portfolio.

The Short Answer

The biggest difference between VOO and VTI is that VOO is a large- and mid-cap ETF, while VTI is a “total market fund” which includes more mid-caps and small-caps. Despite these differences, the risk and return between these two funds is nearly identical and I consider them interchangeable.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: VTI vs VOO

VTI was launched on May 24, 2001, while VOO was launched on September 7, 2010. Since then, VOO has outperformed by .24% annually. This has been primarily driven by large-caps’ relative outperformance during this time period, although that dynamic could reverse in the future. That being said, the performance between these two funds is extremely close and shows that modest differences in market cap exposure does not impact total returns that much. The cumulative performance differential over the past 12 years is only about 12%.

Differences between VTI vs VOO

The biggest difference between VOO and VTI is the market cap exposure of the funds. VOO tracks the S&P 500 index which includes mostly large-caps and some mid-caps. VTI tracks the CRSP US Total Market Index which covers much more of the market by including more mid-caps and small-caps.

Geographic Exposure

Both VOO and VTI hold essentially 100% stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

VOO tracks the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. VTI tracks the broader CRSP US Total Market Index and so it owns many more mid-caps and small-caps. In other words, VOO is a large-cap vehicle and VTI is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

	VOO	VTI
Large-Cap	84%	73%
Mid-Cap	16%	19%
Small-Cap	0%	8%

Sector Weights

The sector weights between VOO and VTI are nearly identical.

	VOO	VTI
Basic Materials	2.46%	2.65%
Consumer Cyclical	9.57%	9.77%
Financial Services	13.84%	13.93%
Real Estate	2.80%	3.51%
Communication Services	7.28%	6.71%
Energy	5.23%	5.15%
Industrials	9.06%	10.07%
Technology	23.04%	22.48%
Consumer Defensive	7.61%	6.98%
Healthcare	15.92%	15.69%
Utilities	3.19%	3.07%

Expenses

The expense ratio for both funds is .03%, which extremely low.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VOO and VTI should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VOO and VTI is about .01%, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, neither VTI nor VOO has ever made a capital gains distribution (nor do I expect them to). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: VTI vs VOO

Both VOO and VTI are large, core funds sponsored and managed by Vanguard, one of the largest investment sponsors in the world. Although VOO is more of a large-cap ETF and VTI is a total market ETF, performance has been extremely similar.

I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better” (unless one has a clear view on whether larger caps or smaller caps will perform better in the future and even then the difference won’t be much)! In my opinion, both funds are among the best ETFs out there and investors cannot really go wrong with either.

The Schwab S&P 500 Index Fund (SWPPX) and the Schwab Large Cap ETF (SCHX) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and SCHX are large-cap index funds and form the core of many investor portfolios. Many investors compare SWPPX vs SCHX in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

The main difference is that SWPPX is a mutual fund and SCHX is an ETF; however investors should consider several other factors when deciding which is best. The two funds technically track different indices, but the indices and funds are identical for all intents and purposes.

The Long Answer

Historical Performance: SWPPX vs SCHX

SWPPX was launched back in 1997, while SCHX was launched in late 2009. Since then the two funds have performed identically, with a difference of just .06% annually! The cumulative performance difference between these two funds has been just over 3% (over a 13 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs SCHX

Although SWPPX tracks the S&P 500 and SCHX tracks the Dow Jones US Large Cap Total Stock Market Index, the two indices and funds are identical for all intents and purposes. A quick glance at the above chart is sufficient to understand this, so I won’t bore readers by digging into country, sector, and market cap exposures.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Schwab. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX or SCHX. However, only SCHX is free to trade in many non-Schwab accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for SCHX and individual investor trades will not generally be large enough to “move” the market. In the case of SCHX, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, SCHX is more tax-efficient.

SWPPX has made capital gains distributions in the past and I would expect this to continue in future. SCHX has never paid out a capital gain distribution, nor do I expect it to in the future. Thus, tax-sensitive investors may want to consider whether ETFs make more sense for them.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards SWPPX. If all ETFs, I might lean more towards SCHX.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for SCHX is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: SWPPX vs SCHX

Both SWPPX and SCHX are large, core funds sponsored and managed by Schwab. Performance has been nearly identical. I view SWPPX and SCHX as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select SWPPX or SCHX solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

The Vanguard S&P 500 Index Fund (VFIAX) and the Blackrock/iShares S&P 500 ETF (IVV) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both VFIAX and IVV track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare VFIAX vs IVV in order to decide which should be the foundation of their portfolio.

The Short Answer

The main difference is that VFIAX is a mutual fund and IVV is an ETF; however investors should consider several other factors when deciding which is best.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: VFIAX vs IVV

IVV was launched back in 2000, while VFIAX was launched a year later in late 2000. Since their common inception date, the two funds have performed nearly identically, with a difference of just .03% annually! The cumulative performance difference between these two funds has only been about 2.5% (over a 22 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between VFIAX vs IVV

Both VFIAX and IVV track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is generally free to trade VFIAX or IVV. However, only IVV is free to trade in many non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for IVV and individual investor trades will not generally be large enough to “move” the market. In the case of IVV, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, many Vanguard mutual funds (including VFIAX) have an ETF share class that allows the mutual fund portfolio to enjoy the tax benefits of ETFs. So, in this case, VFIAX and IVV are equivalent in terms of tax-efficiency.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VFIAX. If all ETFs, I might lean more towards IVV.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

VFIAX does not have a stated minimum for purchases, although some brokerages (especially competitors of Vanguard) impose minimums. The minimum purchase size for IVV is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VFIAX vs IVV

Both VFIAX and IVV are large, core funds sponsored and managed by Vanguard and Blackrock’s iShares respectively. Performance has been nearly identical. I view VFIAX and IVV as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select VFIAX or IVV solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

The Vanguard S&P 500 Index Fund (VFIAX) and the State Street S&P 500 ETF (SPY) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both VFIAX and SPY track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare VFIAX vs SPY in order to decide which should be the foundation of their portfolio.

The Short Answer

The main difference is that VFIAX is a mutual fund and SPY is an ETF; however investors should consider several other factors when deciding which is best.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: VFIAX vs SPY

SPY was launched back in 1993, while VFIAX was launched a few years later in late 2000. Since their common inception date, the two funds have performed nearly identically, with a difference of just .07% annually! The cumulative performance difference between these two funds has been about 5% (over a 22 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between VFIAX vs SPY

Both VFIAX and SPY track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is generally free to trade VFIAX or SPY. However, only SPY is free to trade in many non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for SPY and individual investor trades will not generally be large enough to “move” the market. In the case of SPY, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, many Vanguard mutual funds (including VFIAX) have an ETF share class that allows the mutual fund portfolio to enjoy the tax benefits of ETFs. So, in this case, VFIAX and SPY are equivalent in terms of tax-efficiency.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VFIAX. If all ETFs, I might lean more towards SPY.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

VFIAX does not have a stated minimum for purchases, although some brokerages (especially competitors of Vanguard) impose minimums. The minimum purchase size for SPY is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VFIAX vs SPY

Both VFIAX and SPY are large, core funds sponsored and managed by Vanguard and State Street respectively. Performance has been nearly identical. I view VFIAX and SPY as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select VFIAX or SPY solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

The Schwab S&P 500 Index Fund (SWPPX) and the State Street S&P 500 ETF (SPY) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and SPY track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare SWPPX vs SPY in order to decide which should be the foundation of their portfolio.

The Short Answer

The main difference is that SWPPX is a mutual fund and SPY is an ETF; however investors should consider several other factors when deciding which is best.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: SWPPX vs SPY

SPY was launched back in 1993, while SWPPX was launched a few years later in 1997. Since their common inception date, the two funds have performed identically, with a difference of just .01% annually! The cumulative performance difference between these two funds has been under 1% (over a 25 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs SPY

Both SWPPX and SPY track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Schwab. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX or SPY. However, only SPY is free to trade in many non-Schwab accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for SPY and individual investor trades will not generally be large enough to “move” the market. In the case of SPY, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, SPY is more tax-efficient.

SWPPX has made capital gains distributions in the past and I would expect this to continue in future. SPY has not paid out a capital gain distribution since 1996, nor do I expect it to in the future. Thus, tax-sensitive investors may want to consider whether ETFs make more sense for them.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards SWPPX. If all ETFs, I might lean more towards SPY.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for SPY is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: SWPPX vs SPY

Both SWPPX and SPY are large, core funds sponsored and managed by Schwab and State Street respectively. Performance has been nearly identical. I view SWPPX and SPY as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select SWPPX or SPY solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

The Schwab S&P 500 Index Fund (SWPPX) and the Blackrock/iShares S&P 500 Index Fund (IVV) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and IVV track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare SWPPX vs IVV in order to decide which should be the foundation of their portfolio.

The Short Answer

The main difference is that SWPPX is a mutual fund and IVV is an ETF; however investors should consider several other factors when deciding which is best.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: SWPPX vs IVV

SWPPX was launched back in 1997, while IVV was launched in May 2000. Since then the two funds have performed identically, with a difference of just .01% annually! The cumulative performance difference between these two funds has been just over .4% (over a 23 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs IVV

Both SWPPX and IVV track the S&P 500, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical with 504 stocks each. The S&P 500 has more than 500 stocks because of the index constituents have multiple share classes of stock (such as GOOG and GOOGL).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Schwab. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Schwab does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Schwab, it is generally free to trade SWPPX or IVV. However, only IVV is free to trade in many non-Schwab accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for IVV and individual investor trades will not generally be large enough to “move” the market. In the case of IVV, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). As expected, IVV is more tax-efficient.

SWPPX has made capital gains distributions in the past and I would expect this to continue in future. IVV has never paid out a capital gain distribution, nor do I expect it to in the future. Thus, tax-sensitive investors may want to consider whether ETFs make more sense for them.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards SWPPX. If all ETFs, I might lean more towards IVV.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for IVV is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: SWPPX vs IVV

Both SWPPX and IVV are large, core funds sponsored and managed by Schwab and Blackrock’s iShares respectively. Performance has been nearly identical. I view SWPPX and IVV as essentially interchangeable and would not spend too much energy trying to decide which one is “better.”

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select SWPPX or IVV solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.