The Vanguard FTSE All-World ex-US Index Fund (Admiral Shares) (symbol VFWAX) and the Vanguard FTSE All-World ex-US ETF (symbol VEU) are two of the largest and most popular global “ex-US” index funds. Some compare VFWAX vs VEU not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VFWAX and VEU are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VFWAX and VEU are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VFWAX vs VEU

VEU was launched on March 3, 2007, while VFWAX was launched a few days later on September 27, 2011. Since that time, performance has been identical: 5.53% vs 5.55% annually. Despite changes in fees and expenses over this time period, there is less than a half percent difference in cumulative performance since inception! Looking at the chart of VFWAX vs VEU below, it is obvious that they are identical.

Differences Between VFWAX and VEU

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VFWAX or VEU. However, only VEU is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .04% for VEU and individual investor trades will not generally be large enough to “move” the market. In the case of VEU, 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, 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, VEU is able to extend its tax benefits to VFWAX.

VFWAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VEU is more tax-efficient than VFWAX, but this incorrect as neither fund has ever made a capital gains distribution.

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 VFWAX. If all ETFs, I might lean more towards VEU.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VFWAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VEU 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: VFWAX vs VEU

VFWAX and VEU are literally the same. However, investors should consider the above factors when deciding which one is best for them.

Further Reading

Investors curious about Vanguard’s other popular global ETF offering may want to read our review of VEU vs VXUS.

The Vanguard Information Technology Index Fund (Admiral Shares) (symbol VITAX) and the Vanguard Information Technology ETF (symbol VGT) are two of the largest and most popular tech index funds. Some compare VITAX vs VGT not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VITAX and VGT are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VITAX and VGT are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VITAX vs VGT

VGT was launched on January 27, 2004. Since that time, performance has been nearly identical to VITAX: 11.98% vs 11.94% annually. Despite changes in fees and expenses over this time period, there is only about a five percent difference in cumulative performance since inception! Looking at the chart of VITAX vs VGT below, it is obvious that they are identical.

Differences Between VITAX and VGT

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VITAX or VGT. However, only VGT is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .03% for VGT and individual investor trades will not generally be large enough to “move” the market. In the case of VGT, 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, 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, VGT is able to extend its tax benefits to VITAX.

VITAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VGT is more tax-efficient than VITAX, but this incorrect as neither fund has ever made a capital gains distribution.

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 VITAX. If all ETFs, I might lean more towards VGT.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VITAX does have a stated minimum initial purchase of $100,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VGT 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: VITAX vs VGT

VITAX and VGT are literally the same. However, investors should consider the above factors when deciding which one is best for them.

The Vanguard Short-Term Bond Index Fund (Admiral Shares) (symbol VBIRX) and the Vanguard Short-Term Bond Index ETF (symbol BSV) are two of the largest and most popular short-term bond index funds. Some compare VBIRX vs BSV not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VBIRX and BSV are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VBIRX and BSV are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VBIRX vs BSV

VBIRX was launched on November 11, 2001 and BSV was launched a few years later on April 3, 2007. Perhaps not surprisingly, performance has been identical since that time: 2.15% vs 2.13% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is just 30 basis points! Looking at the chart of VBIRX vs BSV below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VBIRX vs BSV during the first half of 2020. BSV declined nearly 5% (from +3% to -2%), while VBIRX only declined 2%. Remember, these are simply different share classes of the exact same fund! However, BSV trades at a market price and VBIRX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the BSV value was closer to value of the underlying portfolio than the VBIRX NAV. Interestingly, holders of VBIRX could have sold their holdings and rotated into BSV (which is the exact same portfolio) at a substantial discount.

Differences Between VBIRX and BSV

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VBIRX or BSV. However, only BSV is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for BSV and individual investor trades will not generally be large enough to “move” the market. In the case of BSV, 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, 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, BSV is able to extend its tax benefits to VBIRX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VBIRX AND BSV have made capital gains distributions in the past and will likely continue to do so. For instance, in 2021 both distributed an identical percentage. I noticed some posts on the internet saying that BSV is more tax-efficient than VBIRX, but this incorrect.

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 VBIRX. If all ETFs, I might lean more towards BSV.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VBIRX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for BSV 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: VBIRX vs BSV

VBIRX and BSV are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Short-Term Corporate Bond Index Fund (Admiral Shares) (symbol VSCSX) and the Vanguard Short-Term Corporate Bond Index Fund ETF (symbol VCSH) are two of the largest and most popular corporate bond index funds. Some compare VSCSX vs VCSH not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VSCSX and VCSH are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VSCSX and VCSH are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VSCSX vs VCSH

Both VSCSX and VCSH were launched on November 19, 2009. Perhaps not surprisingly, performance has been identical since that time: 2.27% vs 2.28% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is only 15 basis points! Looking at the chart of VSCSX vs VCSH below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VSCSX vs VCSH during the first half of 2020. VCSH declined about 13% (from +2% to -11%), while VSCSX “only” declined 7.5%+. Remember, these are simply different share classes of the exact same fund! However, VCSH trades at a market price and VSCSX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the VCSH value was closer to value of the underlying portfolio than the VSCSX NAV. Interestingly, holders of VSCSX could have sold their holdings and rotated into VCSH (which is the exact same portfolio) at a substantial discount.

VCSH mostly invests in corporate bonds, which are less liquid than Treasuries. However, even funds that invest 100% in Treasuries ran into the same issue, as evidenced by looking at VBTLX vs BND.

Differences Between VSCSX and VCSH

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VSCSX or VCSH. However, only VCSH is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for VCSH and individual investor trades will not generally be large enough to “move” the market. In the case of VCSH, 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, 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, VCSH is able to extend its tax benefits to VSCSX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VSCSX AND VCSH have made capital gains distributions in the past and will likely continue to do so. For instance, in 2021 both distributed an identical percentage. I noticed some posts on the internet saying that VCSH is more tax-efficient than VSCSX, but this incorrect.

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 VSCSX. If all ETFs, I might lean more towards VCSH.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VSCSX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VCSH 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: VSCSX vs VCSH

VSCSX and VCSH are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Intermediate-Term Corporate Bond Index Fund (Admiral Shares) (symbol VICSX) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF (symbol VCIT) are two of the largest and most popular corporate bond index funds. Some compare VICSX vs VCIT not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VICSX and VCIT are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VICSX and VCIT are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VICSX vs VCIT

Both VICSX and VCIT were launched on November 19, 2009. Perhaps not surprisingly, performance has been identical since that time: 3.86% vs 3.88% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is just over 40 basis points! Looking at the chart of VICSX vs VCIT below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VICSX vs VCIT during the first half of 2020. VCIT declined about 18% (from +5% to -13%), while VICSX “only” declined 14%. Remember, these are simply different share classes of the exact same fund! However, VCIT trades at a market price and VICSX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the VCIT value was closer to value of the underlying portfolio than the VICSX NAV. Interestingly, holders of VICSX could have sold their holdings and rotated into VCIT (which is the exact same portfolio) at a substantial discount.

VCIT mostly invests in corporate bonds, which are less liquid than Treasuries. However, even funds that invest 100% in Treasuries ran into the same issue, as evidenced by looking at VBTLX vs BND.

Differences Between VICSX and VCIT

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VICSX or VCIT. However, only VCIT is free to trade in non-Vanguard accounts.

Unfortunately, Vanguard does charge a .25% fee on purchases of VICSX, no matter where the account is held. So investors should consider whether their allocation will be a one-time purchase or averaged in over time, as that may help them determined whether the mutual fund or ETF is a better choice.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for VCIT and individual investor trades will not generally be large enough to “move” the market. In the case of VCIT, 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, 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, VCIT is able to extend its tax benefits to VICSX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VICSX AND VCIT have made capital gains distributions in the past and will likely continue to do so. For instance, in 2021 both distributed an identical percentage. I noticed some posts on the internet saying that VCIT is more tax-efficient than VICSX, but this incorrect.

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 VICSX. If all ETFs, I might lean more towards VCIT.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VICSX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VCIT 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: VICSX vs VCIT

VICSX and VCIT are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Large-Cap Index Fund (Admiral Shares) (symbol VLCAX) and the Vanguard Large-Cap ETF (symbol VV) are two of the largest and most popular large-cap index funds. Some compare VLCAX vs VV not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VLCAX and VV are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VLCAX and VV are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VLCAX vs VV

VV was launched on January 27, 2004, while VLCAX was launched a few days later on February 2, 2004. Since that time, performance has been identical: 9.31% vs 9.30% annually. Despite changes in fees and expenses over this time period, there is only about a half percent difference in cumulative performance since inception! Looking at the chart of VLCAX vs VV below, it is obvious that they are identical.

Differences Between VLCAX and VV

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VLCAX or VV. However, only VV is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .04% for VV and individual investor trades will not generally be large enough to “move” the market. In the case of VV, 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, 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, VV is able to extend its tax benefits to VLCAX.

VLCAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VV is more tax-efficient than VLCAX, but this incorrect as neither fund has ever made a capital gains distribution.

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 VLCAX. If all ETFs, I might lean more towards VV.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VLCAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VV 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: VLCAX vs VV

VLCAX and VV are literally the same. However, investors should consider the above factors when deciding which one is best for them.

Further Reading

Investors curious about Vanguard’s small-cap funds may want to read our comparison of VSMAX vs VB.

The Vanguard Small-Cap Index Fund (Admiral Shares) (symbol VSMAX) and the Vanguard Small-Cap ETF (symbol VB) are two of the largest and most popular small-cap index funds. Some compare VSMAX vs VB not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations.

The Short Answer

VSMAX and VB are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VSMAX and VB are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VSMAX vs VB

VSMAX was launched on November 13, 2000, while VB was launched a few years later on January 26, 2004. Since that time, performance has been identical: 9.14% vs 9.15% annually! Despite changes in fees and expenses over this time period, there has only been about a 1% difference in cumulative performance since inception! Looking at the chart of VSMAX vs VB below, it is obvious that they are identical.

Differences Between VSMAX and VB

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

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 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 VSMAX or VB. However, only VB is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .07% for VB and individual investor trades will not generally be large enough to “move” the market. In the case of VB, individual investors should not have a problem trading. Interestingly, the bid-ask spread of VB is more than the annualized performance difference of VSMAX vs VB.

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, 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, VB is able to extend its tax benefits to VSMAX.

VSMAX paid a capital gain distribution in 2000, but has not made any since then (nor do I expect it to make any in the future due to the existence of VB). I noticed some posts on the internet saying that VB is more tax-efficient than VSMAX, but this incorrect as neither fund has ever made a capital gains distribution.

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 VSMAX. If all ETFs, I might lean more towards VB.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VSMAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VB 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: VSMAX vs VB

VSMAX and VB are literally the same. However, investors should consider the above factors when deciding which one is best for them.

Further Reading

Investors curious about Vanguard’s large-cap funds may want to read our comparison of VLCAX vs VV.

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

The Short Answer

There are not many differences between FXAIX and SPLG, besides the fact that FXAIX is a mutual fund and SPLG is an ETF. Therefore, investors should consider factors beyond the underlying portfolios (which are essentially identical) in order to decide which fund is best for them.

A quick reminder that this site does NOT provide investment recommendations.

The Long Answer

Historical Performance: FXAIX vs SPLG

FXAIX was launched on February 17, 1988, while SPLG was launched on November 8, 2005. Since then the two funds have performed identically; both funds have returned 9.45% annually! The cumulative performance difference between these two funds is roughly .26% (incredible considering the timeframe)! From a performance perspective, I would consider these two funds interchangeable.

Differences between FXAIX vs SPLG

Both FXAIX and SPLG 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 and 505 securities 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 Fidelity. However, 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 FXAIX or SPLG. However, only SPLG is free to trade in many non-Fidelity accounts.

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

FXAIX has made capital gains distributions in the past and I would expect this to continue in future. SPLG has not paid out a capital gain distribution in 15 years and I do not 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 FXAIX. If all ETFs, I might lean more towards SPLG.

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

FXAIX does not have a stated minimum for purchases, although some brokerages (especially competitors of Fidelity) impose minimums. The minimum purchase size for SPLG 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: FXAIX vs SPLG

Both FXAIX and SPLG are large, core funds sponsored and managed by Fidelity and State Street 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. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select FXAIX or SPLG 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 Fidelity S&P 500 Index Fund (FXAIX) and the iShares Core 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 FXAIX and IVV track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare FXAIX vs IVV in order to decide which should be the foundation of their portfolio.

The Short Answer

There are not many differences between FXAIX and IVV, besides the fact that FXAIX is a mutual fund and IVV is an ETF. Therefore, investors should consider factors beyond the underlying portfolios (which are essentially identical) in order to decide which fund is best for them.

A quick reminder that this site does NOT provide investment recommendations.

The Long Answer

Historical Performance: FXAIX vs IVV

FXAIX was launched on February 17, 1988, while IVV was launched on May 15, 2000. Since then the two funds have performed identically, with a difference of just .01% annually! The cumulative performance difference between these two funds is less than 1% (which is incredible considering the 22 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between FXAIX vs IVV

Both FXAIX 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 and 505 securities 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 Fidelity. However, 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 FXAIX or IVV. However, only IVV is free to trade in many non-Fidelity 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.

FXAIX has made capital gains distributions in the past and I would expect this to continue in future. IVV has not paid out a capital gain distribution in 22 years and I do not 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 FXAIX. 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

FXAIX does not have a stated minimum for purchases, although some brokerages (especially competitors of Fidelity) 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: FXAIX vs IVV

Both FXAIX and IVV are large, core funds sponsored and managed by Fidelity and Blackrock 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. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select FXAIX 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 Fidelity S&P 500 Index Fund (FXAIX) and the State Street SPDR S&P 500 ETF Trust (SPY) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both FXAIX and SPY track the well-known S&P 500 index and form the core of many investor portfolios. Many investors compare FXAIX vs SPY in order to decide which should be the foundation of their portfolio.

The Short Answer

There are not many differences between FXAIX and SPY, besides the fact that FXAIX is a mutual fund and SPY is an ETF. Therefore, investors should consider factors beyond the underlying portfolios (which are essentially identical) in order to decide which fund is best for them.

A quick reminder that this site does NOT provide investment recommendations.

The Long Answer

Historical Performance: FXAIX vs SPY

FXAIX was launched on February 17, 1988, while SPY was launched on January 22, 1993. Since then the two funds have performed identically, with a difference of just .03% annually! The cumulative performance difference between these two funds is roughly 13% (quite small considering the nearly thirty year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between FXAIX vs SPY

Both FXAIX 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 and 505 securities 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 Fidelity. However, 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 FXAIX or SPY. However, only SPY is free to trade in many non-Fidelity 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.

FXAIX 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 in 25 years and I do not 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 FXAIX. 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

FXAIX does not have a stated minimum for purchases, although some brokerages (especially competitors of Fidelity) 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: FXAIX vs SPY

Both FXAIX and SPY are large, core funds sponsored and managed by Fidelity and State Street 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. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select FXAIX 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.