FXAIX vs. VFIAX: Which Is the Better S&P 500 Fund?

Someone asks:

These are my options for a 401k through my current employer: VFIAX, FXAIX, and current 2055 target fund.

I am leaning towards the majority in VFIAX. I know this would mirror the S&P 500, so potentially less volatile but also lower fees and a reasonably consistent rate of return year after year.

FXAIX vs. VFIAX: What Are the Differences?

  • FXAIX is a mutual fund from Fidelity. VFIAX is a mutual fund from Vanguard.
  • FXAIX has an expense ratio of 0.02% while VFIAX has an expense ratio of 0.04%.
  • Vanguard requires investors to invest at least $3,000 in VFIAX.
  • FXAIX doesn’t have a minimum investment.
  • There is a $75 transaction fee if you purchase VFIAX on Fidelity. If you have a Fidelity account, it is better to buy FXAIX.

FXAIX vs. VFIAX: How Are They Similar?

  • Both mutual funds track the S&P 500 Index.
  • FXAIX and VFIAX pay dividends to shareholders every quarter.
  • Their top 10 holdings include Apple, Microsoft, Amazon, Google, Tesla, Facebook, Nvidia, Berkshire Hathaway, and UnitedHealth.

Compare 5-year Performance & Returns

Funds Fidelity® 500 Index Fund Vanguard 500 Index Fund Admiral Shares
1 month +4.48% +4.48%
3 months +11.02% +11.02%
6 months +11.66% +11.65%
1 year +28.69% +28.66%
3 years +26.06% +26.03%
5 years +18.46% +18.43%

Which is Better? FXAIX or VFIAX?

We asked our community of Fidelity investors and here’s what they have to say about FXAIX and VFIAX.

Let’s find out which fund is a better investment for your portfolio.

Craig D:

FXAIX has no minimum to invest, and expense ratio of 0.015%

VFIAX has a $2,500 minimum to invest through Fidelity and an expense ratio of 0.04%.

The difference in expense ratio is minimal, but it’s still 50% less than VFIAX. Investing through Fidelity, it will cost $75.00 in transaction fees for every time you buy VFIAX. So, if you invest $500/month into VFIAX, Fidelity will take $75.00, leaving you with an investment amount of only $425.00.

Turnover rate of VFIAX is 4%. The 30% turnover came from Fidelity, as well as Seeking Alpha. Vanguard site says 4% turnover. FXAIX has performed slightly better than VFAIX over the last 10 year period, sometimes as much as 80 basis points.

If you want the Vanguard 500 through Fidelity, simply buy the ETF VOO instead of VFIAX.

Alan T:

Personally I agree with you and would stay out of the target date fund for two reasons. First, I don’t think bonds are a good investment right now for anyone unless you are already on a fixed income (retired), and two, they usually have higher expense ratios than a general index fund.

Dave C:

I don’t like target dates funds in general, but I especially dislike Fidelity target date funds/Freedom Funds. Two reasons, one I am not a fan of bonds when you are younger, so I would discount a target date fund on that fact alone. Buy as many stocks (VFIAX) as you can now and maybe when you are mid-50s, consider target dates funds. Ever 7% bonds is 7% not doing anything for you.

Two, compare the composition of Fidelity target date funds to something like Vanguard. Fidelity throws everything and the kitchen sink into them, Vanguard’s are made up of only 4 different holding domestic/international indexes for stocks and bonds. Fidelity also charges a much higher fee for them.

Depending on your other choices in the 401(K), I would just put 100% into VFIAX and forget about it. When the stock market tanks, so will that fund, but that is the nature of the beast. If you want something safe, you wont get good returns in good times. Long term indexes are safe and offer the best returns. As you get older, maybe then look into something more conservative.

Shawn B:

Do you have a Roth IRA? You could just do 100% VFIAX in your 401K then pick up a small and mid cap index funds in your IRA.

Richard M:

I’ll be the contrarian voice and say to avoid VFIAX. Roughly 20% of the SP500 index is concentrated in five stocks with utterly insane valuations that are hitched to dreams, not reality.

Huy N:

100% VFAIX because that’s the safest one to hedge against inflation. Also it’ll make your life easier since no allocation rebalancing required.

Andrew B:

Define a clear “tilt” in your portfolio if you want one. Let’s start with the total market as an anchor. I notice that you have the 500 index fund and 2 mid cap funds. If you want no small caps in your funds, then stick with FXAIX and IVOO (mid-cap index fund from Vanguard).

You seem to like blend funds (mix of growth and value) but maybe like growth a bit more. Buy FXAIX, which will track the S&P 500 and then IVOO. If you want something even easier, buy FSKAX as your only equity position-it’s the total market. Yes, there’s some small caps in there but, well, they’re a small part of your portfolio. For bonds, buy FXNAX.

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Hi! I'm Diego, 38, and I currently reside in New York. I work as a financial analyst. I primarily focus on initiatives involving research and data analysis.

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