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.

Posted by Matt

Matt is an investor and investment adviser. He is a CFA charterholder and a CAIA charterholder. His writing on this site is purely educational; he will not make recommendations on this site since he does not know individual readers' situations.