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.

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.