The Schwab S&P 500 Index Fund (SWPPX) and the Schwab Large Cap ETF (SCHX) are two of the largest index mutual funds in existence and easily two of the most popular among individual investors. Both SWPPX and SCHX are large-cap index funds and form the core of many investor portfolios. Many investors compare SWPPX vs SCHX 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 is that SWPPX is a mutual fund and SCHX is an ETF; however investors should consider several other factors when deciding which is best. The two funds technically track different indices, but the indices and funds are identical for all intents and purposes.

The Long Answer

Historical Performance: SWPPX vs SCHX

SWPPX was launched back in 1997, while SCHX was launched in late 2009. Since then the two funds have performed identically, with a difference of just .06% annually! The cumulative performance difference between these two funds has been just over 3% (over a 13 year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between SWPPX vs SCHX

Although SWPPX tracks the S&P 500 and SCHX tracks the Dow Jones US Large Cap Total Stock Market Index, the two indices and funds are identical for all intents and purposes. A quick glance at the above chart is sufficient to understand this, so I won’t bore readers by digging into country, sector, and market cap exposures.

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

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

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.”


SWPPX does not have a stated minimum for purchases, although some brokerages (especially competitors of Schwab) impose minimums. The minimum purchase size for SCHX 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 SCHX

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

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