Fund Comparison

SWPPX vs VOO: Comparison by an expert

The Schwab S&P 500 Index Fund (SWPPX) and the Vanguard S&P 500 Index Fund (VOO) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and VOO track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare SWPPX vs VOO 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 VOO is an ETF; however investors should consider several other factors when deciding which to use.

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 VOO

SWPPX was launched back in 1997, while VOO was launched on September 7, 2010. Since then the two funds have performed identically, with a difference of just .03% annually! The cumulative performance difference between these two funds has been just over 1.4% (over a dozen year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs VOO

Both SWPPX and VOO 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 VOO. However, only VOO 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 VOO and individual investor trades will not generally be large enough to “move” the market. In the case of VOO, 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, VOO is more tax-efficient.

SWPPX has made capital gains distributions in the past and I would expect this to continue in future. VOO 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 VOO.

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 VOO 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 VOO

Both SWPPX and VOO are large, core funds sponsored and managed by Schwab and Vanguard respectively. Performance has been nearly identical. I view SWPPX and VOO 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 VOO 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.

SWPPX vs SWTSX: Comparison by an expert

The Schwab S&P 500 Index mutual fund (SWPPX) and the Schwab Total Stock Market Index mutual fund (SWTSX) are two of the largest mutual funds in existence. Both funds are sponsored and managed by Schwab. SWPPX and SWTSX are the core of many investor portfolios and many investors compare SWPPX vs SWTSX 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 between SWPPX and SWTSX is that SWPPX is a large- and mid-cap fund, while SWTSX is a total market fund. Despite these differences, the risk and return between these two funds is pretty close and I largely consider them interchangeable in a portfolio.

The Long Answer

Historical Performance: SWPPX vs SWTSX

SWPPX was launched on May 19, 1997, while SWTSX was launched a couple years later on June 1, 1999. Since then, SWTSX has outperformed by .35% annually. This is not a huge performance differential, but it does compound over time. The cumulative difference between the two funds since common inception is nearly 37%.

Differences between SWPPX vs SWTSX

The biggest difference between SWPPX and SWTSX is the market cap exposure of the funds. SWPPX tracks the S&P 500 index which includes mostly large-caps and some mid-caps, while SWTSX covers much more of the market by including more mid-caps and small-caps.

Geographic Exposure

Both SWPPX and SWTSX 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 focuses on the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. SWTSX tracks the broader Dow Jones U.S. Total Stock Market Index and so it owns many more mid-caps and small-caps (as of 12/31/2022). In other words, SWPPX is a large-cap vehicle, while SWTSX is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

SWPPXSWTSX
Large-Cap83%72%
Mid-Cap16%19%
Small-Cap0%9%
Source: ThoughtfulFinance.com, Morningstar

Sector Weights

The sector weights between SWPPX and SWTSX are nearly identical, as of 12/31/2022. The weights are within 1% for every single sector.

SWPPXSWTSX
Basic Materials2.46%2.65%
Consumer Cyclical9.56%9.86%
Financial Services13.89%14.08%
Real Estate2.81%3.45%
Communication Services7.28%6.74%
Energy5.23%5.20%
Industrials9.06%9.79%
Technology23.02%22.62%
Consumer Defensive7.61%6.95%
Healthcare15.90%15.58%
Utilities3.18%3.04%
Source: ThoughtfulFinance.com, Morningstar

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 or SWTSX.

It is worth noting that neither fund has a minimum for initial or additional investments. That being said, investors looking for free trades may want to consider an a total market ETF or large-cap ETF, rather than SWTSX or SWPPX.

Expenses

Some investors may point out that the expense ratios between SWTSX and SWPPX differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ratio do not matter that much. In this case, the difference in expenses is fractions of a hundredth of a percent, so no need to compare or split hairs.

Tax Efficiency & Capital Gain Distributions

Both funds have made capital gains distributions in the past and will likely make them in the future. It is not possible to say which one will be more tax-efficient in the future. As index funds, the tax drag on both funds is very low. However, tax-sensitive taxable investors may want to consider using an ETF in lieu of either of these funds.

Final Thoughts: SWPPX vs SWTSX

Both SWPPX and SWTSX are large, core funds sponsored and managed by one of the largest asset managers in the world (Schwab). Beyond market cap exposures, the funds appear and act very similar. Long-term performance has been nearly identical. I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.”

ACWI vs SPGM: Liquidity vs Price

The iShares MSCI All-Country World Index ETF (ACWI) and the iShares Core MSCI All-Country World Index ETF (SPGM) are two popular funds and sponsored by Blackrock’s iShares and State Street SPDRs respectively. ACWI is one of the largest ETFs, while SPGM is quite small. As their names suggest, ACWI and SPGM are a core holding of many portfolios. Many investors compare SPGM vs ACWI 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

ACWI and SPGM are nearly identical is most ways, but ACWI is much larger, liquid, and more expensive than SPGM. Deciding between ACWI and SPGM depends on the tradeoffs that an investor is willing to make.

The Longer Answer

These funds are nearly identical in most ways, although ACWI is a much more expensive fund. However, ACWI is much larger and more liquid than SPGM.

ACWI and SPGM track different indices. The older ACWI tracks the large-cap MSCI All-Country World Index Index, while SPGM tracks the MSCI All-Country World Index Investable Market Index (IMI) which owns more mid-caps and small-caps (see our comparison of the indices here).

History of ACWI and SPGM

ACWI was the first All-Country World Index ETF to launch, back in 2008. This first mover advantage gave it an edge in accumulating assets under management (AUM) and became the liquid vehicle of choice for traders. Even as other All-Country World Index ETFs launched and competitors engaged in cutting fees, ACWI was able to command premium fees due to its size and liquidity. Since SPGM and other similar funds have (to date) been unable to raise substantial assets, ACWI has been able to continue charging fees that are multiples of its competitors.

Historical Performance: SPGM vs ACWI

Since SPGM’s launch in October 2012, it has outperformed ACWI by .38% annually! This has mostly been driven by the fee differential, which currently stands at .23%. The cumulative performance over the past 10 years is over 1%. As the below chart illustrates, the two funds move in lockstep, but the ACWI’s performance is degraded by its expenses.

Differences between SPGM vs ACWI

These two funds are nearly identical in every way. Beyond the expenses, the biggest difference between ACWI and SPGM is the market cap exposure of the funds.

Geographic Exposure

The country exposures of the two funds appears nearly identical. Below are the top country exposures as of 12/31/2022.

ACWISPGM
United States60.12%59.65%
Japan5.53%6.10%
United Kingdom3.85%4.35%
Canada3.08%3.29%
China3.61%3.04%
Source: ThoughtfulFinance.com, iShares, State Street

Market Cap Exposure

ACWI tracks the large- and mid-cap MSCI All-Country World Index Index, while SPGM tracks the more expansive Investable Market Index (IMI) version of the index. So SPGM owns many more mid-caps and small-caps. In other words, ACWI is a large-cap vehicle, while SPGM is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

ACWISPGM
Large-Cap84%81%
Mid-Cap16%12%
Small-Cap0%6%
Source: ThoughtfulFinance.com, Morningstar (as of 1/31/2023)

Sector Weights

The sector weights between ACWI and SPGM are nearly identical, as of 12/31/2022.

ACWISPGM
Information Technology19.90%19.19%
Financials15.05%14.45%
Health Care13.33%13.24%
Consumer Discretionary10.42%12.17%
Industrials10.10%10.68%
Consumer Staples7.74%7.23%
Communication6.77%6.53%
Energy5.56%5.74%
Materials4.97%4.87%
Utilities3.18%3.08%
Real Estate2.61%2.74%
Source: ThoughtfulFinance.com, iShares, State Street

Transaction Costs

Both ACWI and SPGM are free to trade on many platforms. ACWI is one of the largest ETFs around with bid-ask spreads of .01%, while SPGM has not attracted much assets and sports a .13% bid-ask spread.

Expenses

ACWI sports an .32% expense ratio, while SPGM is a fraction of that at .09%. In other words, ACWI is 3x more expensive or 23 basis points more expensive.

Tax Efficiency & Capital Gain Distributions

As with most equity ETFs, neither ACWI nor SPGM makes capital gains distributions. Therefore, both funds are about as tax-efficient as can be.

Final Thoughts: SPGM vs ACWI

Both ACWI and SPGM are large, core funds sponsored and managed by the largest asset managers in the world. Additionally, their underlying portfolios are nearly identical and the two funds move in sync. ACWI is much larger, liquid, and cheaper to trade, although it is also more expensive. Deciding which fund is better is a tough call in my opinion and I do not think there is a right answer as far as which fund is “better.”

ACWI has a much more liquid options market, so any options-related strategies may call for ACWI rather than SPGM.

ACWX vs IXUS: Comparison (and a clear winner)

The iShares MSCI All-Country World Index ex-US ETF (ACWX) and the iShares Core MSCI All-Country World Index ex-US ETF (IXUS) are two of the largest ETFs in existence and both are sponsored by Blackrock’s iShares. As their names suggest, ACWX and IXUS are a core holding of many portfolios. Many investors compare IXUS vs ACWX 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

ACWX and IXUS are nearly identical is most ways, but ACWX is much more expensive than IXUS. In most situations, IXUS is preferable to ACWX.

The Longer Answer

These funds are nearly identical in most ways, although ACWX is a much more expensive fund.

ACWX and IXUS track different indices. The older ACWX tracks the large-cap MSCI All-Country World Index ex-US Index, while IXUS tracks the MSCI All-Country World Index ex-US Investable Market Index (IMI) which owns more mid-caps and small-caps (see our comparison of the indices here).

History of ACWX and IXUS

ACWX was one of the first (if not the first) All-Country World Index ex-US ETF to launch, back in 2008. This first mover advantage gave it an edge in accumulating assets under management (AUM) and became the liquid vehicle of choice for traders. Even as other All-Country World Index ex-US ETFs launched and competitors engaged in cutting fees, ACWX was able to command premium fees. However, Vanguard and other sponsors were able to begin capturing market share with ever decreasing costs. Blackrock (which owns iShares) needed to respond with a lower cost option, but did not want to sacrifice their golden goose ACWX. So rather than cut ACWX’s fees, they launched IXUS at a much lower fee level. Essentially, they created IXUS to compete with Vanguard without giving up the high fees that ACWX was collecting.

Historical Performance: IXUS vs ACWX

Since IXUS’s launch in October 2012, it has outperformed ACWX by .33% annually. This has mostly been driven by the fee differential, which currently stands at .25%. The cumulative performance over the past 10 years is about 5%. As the below chart illustrates, the two funds move in lockstep, but the ACWX’s performance is degraded by its expenses.

Differences between IXUS vs ACWX

These two funds are nearly identical in every way. Beyond the expenses, the biggest difference between ACWX and IXUS is the market cap exposure of the funds.

Geographic Exposure

The country exposures of the two funds appears nearly identical. Below are the top country exposures as of 12/31/2022.

ACWXIXUS
Japan13.95%14.96%
United Kingdom9.69%9.74%
China9.12%8.19%
Canada7.71%7.64%
France7.57%6.80%
Source: ThoughtfulFinance.com, iShares

Market Cap Exposure

ACWX tracks the large- and mid-cap MSCI All-Country World Index ex-US Index, while IXUS tracks the more expansive Investable Market Index (IMI) version of the index. So IXUS owns many more mid-caps and small-caps. In other words, ACWX is a large-cap vehicle, while IXUS is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

ACWXIXUS
Large-Cap87%75%
Mid-Cap12%19%
Small-Cap0%4%
Source: ThoughtfulFinance.com, Morningstar (as of 1/31/2023)

Sector Weights

The sector weights between ACWX and IXUS are nearly identical, as of 12/31/2022.

ACWXIXUS
Financials20.99%19.48%
Industrials12.16%13.25%
Consumer Discretionary11.30%11.32%
Information Technology10.69%10.69%
Health Care9.80%9.45%
Consumer Staples8.88%8.78%
Materials8.32%8.51%
Energy6.02%5.73%
Communication5.91%5.59%
Utilities3.30%3.36%
Real Estate2.24%3.31%
Source: ThoughtfulFinance.com, iShares

Transaction Costs

Both ACWX and IXUS are free to trade on many platforms. These are two of the largest and most liquid ETFs, so the bid-ask spreads are extremely low too.

Expenses

ACWX sports an .32% expense ratio, while IXUS is a fraction of that at .07%. In other words, ACWX is 5x more expensive or 25 basis points more expensive.

Tax Efficiency & Capital Gain Distributions

As with most equity ETFs, neither ACWX nor IXUS makes capital gains distributions. Therefore, both funds are about as tax-efficient as can be.

Final Thoughts: IXUS vs ACWX

Both ACWX and IXUS are large, core funds sponsored and managed by one of the largest asset managers in the world. Additionally, their underlying portfolios are nearly identical and the two funds move in sync. However, ACWX is much more expensive, so IXUS is the way to go in most situations.

IEFA vs EFA: Comparison (and a clear winner)

The iShares MSCI EAFE ETF (EFA) and the iShares Core MSCI EAFE ETF (IEFA) are two of the largest ETFs in existence and both are sponsored by Blackrock’s iShares. EAFE is a acronym that stands for Europe, Australasia, and Far East and so is used to describe developed markets (excluding the Americas). As their names suggest, EFA and IEFA are a core international holding of many portfolios. Many investors compare IEFA vs EFA 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

EFA and IEFA are nearly identical is most ways, but EFA is much more expensive than IEFA. In most situations, IEFA is preferable to EFA.

The Longer Answer

These funds are nearly identical in most ways, although EFA is a much more expensive fund.

EFA and IEFA track different indices. The older EFA tracks the large-cap MSCI EAFE Index, while IEFA tracks the MSCI EAFE Investable Market Index (IMI) which owns more mid-caps and small-caps (see our comparison of the indices here).

History of EFA and IEFA

EFA was the first EAFE ETF to launch, back in 2001. This first mover advantage gave it an edge in accumulating assets under management (AUM) and became the liquid vehicle of choice for traders. Even as other EAFE ETFs launched and competitors engaged in cutting fees, EFA was able to command premium fees. However, Vanguard and other sponsors were able to begin capturing market share with ever decreasing costs. Blackrock (which owns iShares) needed to respond with a lower cost option, but did not want to sacrifice their golden goose EFA. So rather than cut EFA’s fees, they launched IEFA at a much lower fee level. Essentially, they created IEFA to compete with Vanguard without giving up the high fees that EFA was collecting.

Historical Performance: IEFA vs EFA

Since IEFA’s launch in October 2012, it has outperformed EFA by .36% annually! This has mostly been driven by the fee differential, which currently stands at .26%. The cumulative performance over the past 10 years is nearly 6%. As the below chart illustrates, the two funds move in lockstep, but EFA’s performance is degraded by its expenses.

Differences between IEFA vs EFA

These two funds are nearly identical in every way. Beyond the expenses, the biggest difference between EFA and IEFA is the market cap exposure of the funds.

Geographic Exposure

The country exposures of the two funds appears nearly identical. Below are the top country exposures as of 12/31/2022.

EFAIEFA
Japan21.87%23.23%
United Kingdom15.21%15.14%
France11.81%10.59%
Switzerland10.11%9.31%
Germany8.12%8.22%
Source: ThoughtfulFinance.com, iShares

Market Cap Exposure

EFA tracks the large- and mid-cap MSCI EAFE Index, while IEFA tracks the more expansive Investable Market Index (IMI) version of the index. So IEFA owns many more mid-caps and small-caps. In other words, EFA is a large-cap vehicle, while IEFA is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

EFAIEFA
Large-Cap87%75%
Mid-Cap12%20%
Small-Cap0%4%
Source: ThoughtfulFinance.com, Morningstar (as of 1/31/2023)

Sector Weights

The sector weights between EFA and IEFA are nearly identical, as of 12/31/2022.

EFAIEFA
Financials18.60%17.59%
Industrials15.01%16.09%
Health Care13.50%12.51%
Consumer Discretionary11.03%11.20%
Consumer Staples10.43%9.83%
Information Technology7.79%7.99%
Materials7.77%7.97%
Energy4.94%4.63%
Communication4.49%4.40%
Utilities3.47%3.84%
Real Estate2.62%3.41%
Source: ThoughtfulFinance.com, iShares

Transaction Costs

Both EFA and IEFA are free to trade on many platforms. These are two of the largest and most liquid ETFs, so the bid-ask spreads are extremely low too.

Expenses

EFA sports an .33% expense ratio, while IEFA is a fraction of that at .07%. In other words, EFA is nearly 5x more expensive or 26 basis points more expensive.

Tax Efficiency & Capital Gain Distributions

As with most equity ETFs, neither EFA nor IEFA makes capital gains distributions. Therefore, both funds are about as tax-efficient as can be.

Final Thoughts: IEFA vs EFA

Both EFA and IEFA are large, core funds sponsored and managed by one of the largest asset managers in the world. Additionally, their underlying portfolios are nearly identical and the two funds move in sync. However, EFA is much more expensive, so IEFA is the way to go in most situations.

EFA has a much more liquid options market, so any options-related strategies may call for EFA rather than IEFA (but I would go with IEFA in every other situation I can think of).

IEMG vs EEM: Comparison With A Clear Winner

The iShares MSCI Emerging Markets ETF (EEM) and the iShares Core MSCI Emerging Markets ETF (IEMG) are two of the largest ETFs in existence and both are sponsored by Blackrock’s iShares. As their names suggest, EEM and IEMG are a core holding of many portfolios. Many investors compare IEMG vs EEM 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

EEM and IEMG are nearly identical is most ways, but EEM is much more expensive than IEMG. In most situations, IEMG is preferable to EEM.

The Longer Answer

These funds are nearly identical in most ways, although EEM is a much more expensive fund.

EEM and IEMG track different indices. The older EEM tracks the large-cap MSCI Emerging Markets Index, while IEMG tracks the MSCI Emerging Markets Investable Market Index (IMI) which owns more mid-caps and small-caps (see our comparison of the indices here).

History of EEM and IEMG

EEM was the first emerging markets ETF to launch, back in 2003. This first mover advantage gave it an edge in accumulating assets under management (AUM) and became the liquid vehicle of choice for traders. Even as other emerging markets ETFs launched and competitors engaged in cutting fees, EEM was able to command premium fees. However, Vanguard and other sponsors were able to begin capturing market share with ever decreasing costs. Blackrock (which owns iShares) needed to respond with a lower cost option, but did not want to sacrifice their golden goose EEM. So rather than cut EEM’s fees, they launched IEMG at a much lower fee level. Essentially, they created IEMG to compete with Vanguard without giving up the high fees that EEM was collecting.

Historical Performance: IEMG vs EEM

Since IEMG’s launch in October 2012, it has outperformed EEM by .78% annually! This has mostly been driven by the fee differential, which currently stands at .6%. The cumulative performance over the past 10 years is over 10%. As the below chart illustrates, the two funds move in lockstep, but the EEM’s performance is degraded by its expenses.

Differences between IEMG vs EEM

These two funds are nearly identical in every way. Beyond the expenses, the biggest difference between EEM and IEMG is the market cap exposure of the funds.

Geographic Exposure

The country exposures of the two funds appears nearly identical. Below are the top country exposures as of 12/31/2022.

EEMIEMG
China32.20%29.21%
India14.38%15.45%
Taiwan13.75%14.48%
Korea11.27%11.58%
Brazil5.24%5.28%
Source: ThoughtfulFinance.com, iShares

Market Cap Exposure

EEM tracks the large- and mid-cap MSCI Emerging Markets Index, while IEMG tracks the more expansive Investable Market Index (IMI) version of the index. So IEMG owns many more mid-caps and small-caps. In other words, EEM is a large-cap vehicle, while IEMG is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

EEMIEMG
Large-Cap91%79%
Mid-Cap10%17%
Small-Cap0%5%
Source: ThoughtfulFinance.com, Morningstar

Sector Weights

The sector weights between EEM and IEMG are nearly identical, as of 12/31/2022.

EEMIEMG
Financials22.01%20.44%
Information Technology18.59%18.18%
Consumer Discretionary14.02%13.62%
Communication9.85%9.36%
Materials8.78%9.10%
Consumer Staples6.41%7.28%
Industrials6.04%6.42%
Energy4.86%4.77%
Healthcare4.07%4.55%
Utilities3.04%3.08%
Real Estate1.94%2.58%
Source: ThoughtfulFinance.com, iShares

Transaction Costs

Both EEM and IEMG are free to trade on many platforms. These are two of the largest and most liquid ETFs, so the bid-ask spreads are extremely low too.

Expenses

EEM sports an .69% expense ratio, while IEMG is a fraction of that at .09%. In other words, EEM is 7x more expensive or 60 basis points more expensive.

Tax Efficiency & Capital Gain Distributions

As with most equity ETFs, neither EEM nor IEMG makes capital gains distributions. Therefore, both funds are about as tax-efficient as can be.

Final Thoughts: IEMG vs EEM

Both EEM and IEMG are large, core funds sponsored and managed by one of the largest asset managers in the world. Additionally, their underlying portfolios are nearly identical and the two funds move in sync. However, EEM is much more expensive, so IEMG is the way to go in most situations.

EEM has a much more liquid options market, so any options-related strategies may call for EEM rather than IEMG (but I would go with IEMG in every other situation I can think of).

FSKAX vs VFIAX

The Vanguard S&P 500 Index Fund (VFIAX) and the Fidelity Total Stock Market Index fund (FSKAX) are two of the largest mutual funds in existence. VFIAX and FSKAX are the core of many investor portfolios. Many investors compare VFIAX vs FSKAX 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 between VFIAX and FSKAX is that VFIAX is a large- and mid-cap fund, while FSKAX is a total market fund. Despite these differences, the total return between these two funds is pretty close.

The Long Answer

Historical Performance: VFIAX vs FSKAX

VFIAX was launched on November 13, 2000, while FSKAX was launched on September 8, 2011 (although other shares classes of the fund existed prior to that). Since then, VFIAX has outperformed by about a half percent annually. This is not a huge performance differential, but it does compound over time. The cumulative difference between the two funds since common inception is just over 16%.

Of course, the outperformance of VFIAX is reflective of large-cap stocks’ dominance over the past decade. If mid-caps and/or small-caps lead, then I suspect FSKAX would outperform.

Differences between VFIAX vs FSKAX

The biggest difference between VFIAX and FSKAX is the market cap exposure of the funds. VFIAX tracks the S&P 500 index which includes mostly large-caps and some mid-caps, while FSKAX covers much more of the market by including more mid-caps and small-caps.

Geographic Exposure

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

Market Cap Exposure

VFIAX focuses on the S&P 500 index and so it mostly holds large-caps with a bit of mid-cap exposure. FSKAX tracks the broader Dow Jones U.S. Total Stock Market Index and so it owns many more mid-caps and small-caps (as of 11/30/2022). In other words, VFIAX is a large-cap vehicle, while FSKAX is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

VFIAXFSKAX
Large-Cap84%73%
Mid-Cap16%19%
Small-Cap0%9%
Source: ThoughtfulFinance.com, Morningstar

Sector Weights

The sector weights between VFIAX and FSKAX are nearly identical, as of 11/30/2022. The weights are within 1% of each other for every single sector.

VFIAXFSKAX
Basic Materials2.46%2.68%
Consumer Cyclical9.57%10.43%
Financial Services13.84%14.04%
Real Estate2.80%3.46%
Communication Services7.28%6.91%
Energy5.23%5.13%
Industrials9.06%9.58%
Technology23.04%23.18%
Consumer Defensive7.61%6.77%
Healthcare15.92%14.97%
Utilities3.19%2.87%
Source: ThoughtfulFinance.com, Morningstar

Transaction Costs

Many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, neither Fidelity nor Vanguard participates 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 Fidelity, it is generally free to trade FXAIX; similarly, VFIAX is generally free to trade at Vanguard.

It is worth noting that neither fund has a minimum for initial or additional investments. That being said, investors looking for free trades may want to consider an a total market ETF or large-cap ETF, rather than FSKAX or VFIAX.

Expenses

Some investors may point out that the expense ratios between FSKAX and VFIAX differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ratio do not matter that much. In this case, the difference in expenses is hundredths of a percent, so no need to compare or split hairs.

Tax Efficiency & Capital Gain Distributions

FSKAX regularly makes capital gains distributions, while VTSAX does not make capital gains distributions (nor do I expect it to, due to Vanguard’s fund structure). FSKAX is an index fund and therefore pretty tax-efficient; however, VFIAX is the more tax-efficient option.

Final Thoughts: VFIAX vs FSKAX

Both VFIAX and FSKAX are large, core funds sponsored and managed by some of the largest asset managers in the world (Vanguard and Fidelity). Beyond market cap exposures, the funds appear and act very similar. Long-term performance has been nearly identical. I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.”

One consideration that might tip the scales is where the investors’ account is. Unlike ETFs, many mutual funds are still subject to trading fees and/or short-term redemption fees. So if my accounts were at Vanguard, I might lean more towards VFIAX. If my accounts were at Fidelity, I might favor FSKAX. If my account wasn’t at Vanguard or Fidelity, I’d probably use an ETF for free trading and tax-efficiency. But overall, these two funds are very similar and I wouldn’t worry too much about picking the “right” one.

FNILX vs VFIAX

The Vanguard S&P 500 Index Fund (VFIAX) is one of the largest mutual funds in the world, with multiple share classes that go back decades. In 2018, Fidelity launched the ZERO Large Cap Index Fund (FNILX) which advertises a 0% expense ratio. Investors evaluating VFIAX vs FNILX will be hard-pressed to find many differences, but there are a few. The funds are nearly identical in every way, except for one major difference: FNILX cannot be bought or owned in non-Fidelity accounts.

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 very few differences between VFIAX and FNILX, except for the fact that FNILX cannot be bought or owned outside of Fidelity. The other major difference is that the VFIAX is quite a bit more tax-efficient.

The underlying benchmark indices that these funds track are technically different (S&P 500 Index vs Fidelity U.S. Large Cap Index), but they are identical is most respects. Consequently, the risk and return of VFIAX and FNILX is nearly identical and I consider these two funds equivalent and interchangeable.

Historical Performance: VFIAX vs FNILX

VFIAX was launched in 2000, while FNILX was launched on September 13, 2018. Since that time, the fund’s have performed nearly identically: 8.43% vs 8.59% annualized. The cumulative performance difference over that time has been less than 1%.

Differences Between VFIAX and FNILX

As the above performance chart shows, the risk and return of the two funds is nearly identical. This is not surprising given the fund composition data below.

Geography

Both the FNILX and VFIAX only include stocks of US-domiciled companies.

Market Capitalization

The two funds have approximately the same number of holdings and the market cap weighting of the funds are nearly identical.

FNILXVFIAX
Large Cap84%84%
Mid Cap16%16%
Small Cap0%0%
Source: ThoughtfulFinance.com, Morningstar.com (as of 11/30/2022)

Sector Weights

The sector weights of each fund are nearly identical with most sector weights within 1% of the other fund.

FNILXVFIAX
Basic Materials2.41%2.46%
Consumer Cyclical9.95%9.57%
Financial Services13.69%13.84%
Real Estate2.64%2.80%
Communication Services7.53%7.28%
Energy5.12%5.23%
Industrials8.48%9.06%
Technology24.76%23.04%
Consumer Defensive7.18%7.61%
Healthcare15.38%15.92%
Utilities2.86%3.19%
Source: ThoughtfulFinance.com, Morningstar.com (as of 11/30/2022)

Factors to Consider

Tradability

In my view, the most important factor to consider when evaluating VFIAX vs FNILX is the fact that FNILX cannot be bought or owned outside of Fidelity. Personally, this is a non-starter for me as there are reasons to transfer assets to other custodians, such as transferring one’s accounts or making a donation. Some investors may not value flexibility as much, but they should be aware of this limitation.

Expenses

FNILX grabbed headlines when Fidelity announced it, due to the 0% expense ratio. While zero expenses is great, it is only .03% less than VFIAX. So ever though the difference in expenses is infinite in relative terms, its only a three basis point difference. At a certain level (such as this one), differences in expense ratios do not matter.

Transaction Costs

ETFs are free to trade at many brokers and custodians, although many still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Fidelity does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VFIAX. If at Fidelity, it is free to trade FNILX. Outside of Fidelity, investors cannot trade FNILX and will have to pay to trade VFIAX (unless at Vanguard). Thus, investors may want to consider using an ETF.

Tax Efficiency & Capital Gain Distributions

FXROX routinely makes capital gains distributions, while VTSAX does not make capital gains distributions (nor do I expect it to, due to Vanguard’s fund structure). Thus, VFIAX is the more tax-efficient choice. Taxable investors may want to consider ETFs which are generally more tax-efficient and can read our reviews of VFIAX vs VOO or VFIAX vs SPY.

Final Thoughts on VFIAX & FNILX

VFIAX and FNILX are nearly identical, except for the fact that FNILX can only be bought and owned at Fidelity. As mentioned above, I view this a severe limitation and would not consider FNILX for my personal portfolio.

FSKAX vs FNILX

The Fidelity ZERO Large Cap Index Fund (FNILX) and the Fidelity Total Stock Market Index fund (FSKAX) are two of the largest mutual funds in existence. FNILX and FSKAX are the core of many investor portfolios. Many investors compare FNILX vs FSKAX 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 FNILX and FSKAX. Firstly, FNILX is a large- and mid-cap fund, while FSKAX is a total market fund. Despite these differences, the total return between these two funds is pretty close.

Secondly, and perhaps more importantly, FNILX cannot be bought or owned outside of Fidelity.

The Long Answer

Historical Performance: FNILX vs FSKAX

FSKAX was launched on September 8, 2011 (although other shares classes of the fund existed prior to that), while FNILX was launched in September 2018. Since then, FNILX has outperformed by about a .6% annually. This is not a huge performance differential, but it does compound over time. The cumulative difference between the two funds since common inception is approximately 3.5%.

Of course, the outperformance of FNILX is reflective of large-cap stocks’ dominance over the past decade. If mid-caps and/or small-caps lead, then I suspect FSKAX would outperform.

Differences between FNILX vs FSKAX

The biggest difference between FNILX and FSKAX is the market cap exposure of the funds. FNILX tracks the S&P 500 index which includes mostly large-caps and some mid-caps, while FSKAX covers much more of the market by including more mid-caps and small-caps.

Geographic Exposure

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

Market Cap Exposure

FNILX focuses on the Fidelity US Large Cap Index and so it mostly holds large-caps with a bit of mid-cap exposure. FSKAX tracks the broader Dow Jones U.S. Total Stock Market Index and so it owns many more mid-caps and small-caps (as of 11/30/2022). In other words, FNILX is a large-cap vehicle, while FSKAX is a total market vehicle. That being said, due to market cap weighting, both funds are overwhelmingly influenced by the large-cap holdings.

FNILXFSKAX
Large-Cap84%73%
Mid-Cap16%19%
Small-Cap0%9%
Source: ThoughtfulFinance.com, Morningstar

Sector Weights

The sector weights between FNILX and FSKAX are nearly identical, as of 11/30/2022. The weights are generally within 1% for every single sector.

FNILXFSKAX
Basic Materials2.41%2.68%
Consumer Cyclical9.95%10.43%
Financial Services13.69%14.04%
Real Estate2.64%3.46%
Communication Services7.53%6.91%
Energy5.12%5.13%
Industrials8.48%9.58%
Technology24.76%23.18%
Consumer Defensive7.18%6.77%
Healthcare15.38%14.97%
Utilities2.86%2.87%
Source: ThoughtfulFinance.com, Morningstar

Factors to Consider

Tradability

In my view, the most important factor to consider when evaluating FSKAX vs FNILX is the fact that FNILX cannot be bought or owned outside of Fidelity. Personally, this is a non-starter for me as there are reasons to transfer assets to other custodians, such as transferring one’s accounts or making a donation. Some investors may not value flexibility as much, but they should be aware of this limitation.

Transaction Costs

Many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Fidelity 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 Fidelity, it is generally free to trade FSKAX and FNILX; other custodians will likely charge a fee to trade Fidelity mutual funds.

It is worth noting that neither fund has a minimum for initial or additional investments. That being said, investors looking for free trades at other custodians may want to consider an a total market ETF or large-cap ETF, rather than FSKAX or FNILX.

Expenses

FNILX grabbed headlines when Fidelity announced it, due to the 0% expense ratio. While zero expenses is great, it is only .015% less than FSKAX. So ever though the difference in expenses is infinite in relative terms, its only a basis point and a half difference. At a certain level (such as this one), differences in expense ratios do not matter.

Tax Efficiency & Capital Gain Distributions

Both funds have made capital gains distributions in the past and will likely make them in the future. It is not possible to say which one will be more tax-efficient in the future. As index funds, the tax drag on both funds is very low. However, tax-sensitive taxable investors may want to consider using an ETF in lieu of either of these funds.

Final Thoughts: FNILX vs FSKAX

Both FNILX and FSKAX are large, core funds sponsored and managed by one of the largest asset managers in the world (Fidelity). Beyond market cap exposures, the funds appear and act very similar. Long-term performance has been nearly identical. I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.”

That being said, investors should not consider FNILX unless their account is at Fidelity. If my accounts were at Fidelity, I might consider FNILX in a tax-exempt or tax-deferred account. However, I would never buy FNILX in a taxable account due to the inability to transfer the assets (without realizing a potential gain) out of Fidelity if I wanted to move my accounts, donate the shares, etc.

For those asking: which is better, FSKAX or FNILX? I believe FSKAX is better than FNILX in most situations. Personally, I would never buy or recommend FNILX due to the limitations.

FSKAX vs SWTSX

The Fidelity Total Stock Market Index fund (FSKAX) and the Schwab Total Stock Market Index Fund (SWTSX) are two of the largest “total market” index funds in existence and easily two of the most popular among individual investors. SWTSX and FSKAX are the core of many investor portfolios and many investors compare FSKAX vs SWTSX 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 very few differences between the two funds, since both FSKAX and SWTSX track the Dow Jones US Total Market Index. Consequently, the risk and return of FSKAX and SWTSX is nearly identical and I consider these two funds equivalent and interchangeable.

The Longer Answer

These two funds are incredibly similar and leads some to question: are SWTSX and FSKAX the same?

Technically, SWTSX and FSKAX are different funds. But for all intents and purposes, SWTSX and FSKAX are identical. Both funds are broad-based indices that represent the US equity markets.

Historical Performance: FSKAX vs SWTSX

SWTSX was launched in 1999, while FSKAX was launched on September 7, 2011 (although other share classes of the Fidelity fund existed prior to this date). Since that time, the two funds have had identical performance: 12.65% vs 12.61% on an annualized basis. Over those 11 years, the cumulative performance differential has been less than 2%!

Differences Between FSKAX and SWTSX

Geography

Both the SWTSX and FSKAX only include stocks of US-domiciled companies.

Market Capitalization

The two funds have a similar number of holdings (as of 11/30/2022); SWTSX holds 3,516 stocks versus FSKAX’s 3,989 stocks. Perhaps not surprisingly, the market cap weighting of the funds are identical.

SWTSXFSKAX
Large Cap72%73%
Mid Cap19%19%
Small Cap9%9%
Source: ThoughtfulFinance.com, Morningstar.com (as of 11/30/2022)

Sector Weights

The sector weights of each fund are nearly identical, with many sector weights within .05% of each other!

SWTSXFSKAX
Basic Materials2.65%2.66%
Consumer Cyclical9.86%10.43%
Financial Services14.08%14.04%
Real Estate3.50%3.46%
Communication Services6.74%6.91%
Energy5.20%5.13%
Industrials9.79%9.58%
Technology22.95%23.18%
Consumer Defensive6.95%6.77%
Healthcare15.58%14.97%
Utilities3.04%2.87%
Source: ThoughtfulFinance.com, Morningstar.com (data as of 12/31/22 for SWTSX and 11/30/22 for FSKAX)

Factors to Consider

Expenses

Some investors may point out that the expense ratios between FSKAX and SWTSX differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ratios do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis).

Transaction Costs

ETFs are free to trade at many brokers and custodians, although many still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, neither Schwab nor Fidelity participates in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Fidelity, it is free to trade FSKAX; However, only accounts at Schwab can trade SWTSX for free.

Investors looking for free trades may want to consider an ETF, as ETFs are free to trade on most platforms including Schwab and Fidelity.

Tax Efficiency & Capital Gain Distributions

Both FSKAX and SWTSX routinely makes capital gains distributions.

Again, tax-sensitive investors may want to consider an ETF. Both FSKAX and SWTSX are relatively tax-efficient since they are index funds, but an ETF is likely to be even more tax-efficient.

Final Thoughts on FSKAX & SWTSX

FSKAX and SWTSX are nearly identical. Personally, I would not spend too much time trying to divine which is “better” and would just choose whichever makes more sense for my portfolio based on the above factors.

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