VTSAX vs. VFIAX: Vanguard Total Stock Market vs 500 Index Fund

Someone asks:

I have most of my index fund investments in VTSAX but recently read about VFAIX. They’re very similar and have similar performance histories, but VFIAX only tracks the top 500 US companies.

Lately, VFIAX seems quite up compared to VTSAX. I recently read this article which gave me more info but hasn’t helped me understand what course I should take in the future.

The article implies that one would want to choose either VTSAX or VFIAX as an “investment strategy.” But is that right? Should I choose one or the other, or would it be wise to hold both?

VTSAX vs VFIAX: Overview

Funds Vanguard Total Stock Market Index Fund Admiral Shares Vanguard 500 Index Fund Admiral Shares
Price 102.30 (NAV) 385.86 (NAV)
3-year total return +17.46% +18.21%
3-year standard deviation 18.44% 17.72%
Morningstar rating :star::star::star::star: :star::star::star::star::star:
Min. initial investment $3,000.00 $3,000.00
Net expense ratio 0.04% 0.04%
Total net assets 313.49bn USD 416.47bn USD
Morningstar category Large Blend Large Blend

Which is better, VTSAX or VFIAX?

Community Answers:

Stephen G:

Vanguard puts its employees’ retirement accounts in VTSAX. They used to have the S&P 500 fund but switched to VTSAX. In the long run, small caps have outperformed large caps.

You could always choose the S&P 500 fund then add whatever percentage of mid and small-cap stocks you want since VTSAX is only 18% mid and 7% small cap.

David L:

VTSAX (Total Stock Market) is a better buy than the S&P 500 if forced to choose just one of the two. However, your other advice is even better: Buy S&P 500 and then buy an appropriate amount of Small Cap. Forget the mid-cap because a huge chunk of Vanguard’s Small Cap is mid-cap. This mix of S&P and small-cap gives a strong return while evening out some risk.

Julie R:

I don’t see much of a difference. They have the same fees (0.04%), and over the last 5 years, their performance is pretty much the same, as shown here.

Doreen B:

I held VFIAX throughout my “accumulation” years, only switching to Vanguard Wellington Admiral (VWENX) as I approached RMD age. I really like VFIAX.

Andrew L:

Basically, it’s a toss-up, not worth fretting about. Theoretically, the VTSAX should come out ahead, but the differences are pretty slim. Just pick one and forget it.

Randy K:

They are so similar I would not buy both. VTSAX is meant to be an all-in-one solution in that it covers the whole market. The S&P 500 fund does not, and it’s common to hold another fund because of this.

Although VTSAX covers the whole market, it is cap-weighted, meaning the proportion of the tail end companies is pretty small, which is why returns are so similar to the S&P 500 fund.

Brad B:

Fees are the same. VTSAX has done just slightly better since inception. VFIAX has done just slightly better over the last 10 years. It’s pretty much a toss-up as they are mostly holding the same things for the most part. With VFIAX having a little in the smaller companies. Guess what you think will do better in the future. Either is not a bad choice.

Richard H:

Well, the 2021 return for VFIAX was 28.66% and for VTSAX 25.71%. Why was VFIAX so much higher? Because over the past couple of years, there has been a record number of IPO’s and SPACS (most of which are bad companies) diluting the extended market space. I would pick VFIAX over VTSAX for this reason.

What’s the Fidelity Equivalent of VTSAX?

FSKAX is the Fidelity equivalent of VTSAX. It tracks the Total Stock Market Index and has cheaper fees than the Vanguard’s Total Stock Market Fund.

What’s the Fidelity Equivalent of VFIAX?

FXAIX is the Fidelity equivalent of VFIAX. The fund tracks the S&P 500 Index and has a comparable expense ratio.

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