FSKAX vs VTSAX

The Fidelity Total Stock Market Index fund (FSKAX) and the Vanguard Total Stock Market Index Fund (VTSAX) are two of the largest “total market” index funds in existence and easily two of the most popular among individual investors. VTSAX and FSKAX are the core of many investor portfolios and many investors compare FSKAX vs VTSAX 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. The underlying benchmark indices that these funds track are technically different (CRSP US Total Market vs Dow Jones US Total Market), but they are identical is most respects. Consequently, the risk and return of FSKAX vs VTSAX funds 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 VTSAX and FSKAX the same?

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

Historical Performance: FSKAX vs VTSAX

VTSAX was launched in 2001, 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 12.68% on an annualized basis. Over those 11 years, the cumulative performance differential has only been 1%!

Differences Between FSKAX and VTSAX

Geography

Both the VTSAX 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); VTSAX holds 4,026 stocks versus FSKAX’s 3,989 stocks. Perhaps not surprisingly, the market cap weighting of the funds are identical.

VTSAXFSKAX
Large Cap73%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!

VTSAXFSKAX
Basic Materials2.65%2.66%
Consumer Cyclical10.35%10.43%
Financial Services13.90%14.04%
Real Estate3.48%3.46%
Communication Services6.89%6.91%
Energy5.09%5.13%
Industrials9.80%9.58%
Technology23.04%23.18%
Consumer Defensive6.80%6.77%
Healthcare15.09%14.97%
Utilities2.91%2.87%
Source: ThoughtfulFinance.com, Morningstar.com (as of 11/30/2022)

Factors to Consider

Expenses

Some investors may point out that the expense ratios between FSKAX and VTSAX 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 Vanguard 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 Vanguard can trade VTSAX for free.

Investors looking for an ETF option (to reduce transaction costs) may consider VTI, the ETF equivalent of VTSAX (since Vanguard ETFs are a share class of their mutual funds). We recently reviewed FSKAX vs VTI.

Tax Efficiency & Capital Gain Distributions

FSKAX routinely makes capital gains distributions, while VTSAX has not made a capital gain distributions since 2000 (and I do not expect it to in the future due to the way that Vanguard structures its ETFs). 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, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, both VTSAX benefits from VTI’s tax-efficient mechanisms.

Thus, tax-sensitive investors may favor VTSAX or an ETF. FSKAX is relatively tax-efficient since it is an index fund, but VTSAX is even more tax-efficient.

Final Thoughts on FSKAX & VTSAX

Except for the fact these funds track different indices, FSKAX and VTSAX 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.