VFIAX vs. VWENX: Which Fund To Hold in a Retirement Account?

Someone asks:

I appreciate all the great info from this group. As a recent retiree, I’ve been reading and learning a lot about asset allocation. Still, one topic I’m struggling with is the mix of investments across my taxable and retirement accounts.

More specifically, assuming one intends to hold a combination of Index funds (VFIAX — S&P 500) and actively managed (VWENX – Wellington Admiral), what are the rationale to consider for deciding whether to hold these funds in taxable vs. retirement accounts? Has anyone seen good info on this from Vanguard or elsewhere?

VFIAX vs. VWENX: Fund Overview

Funds Vanguard 500 Index Fund Admiral Shares Vanguard Wellington Fund Admiral Shares
Price 389.09 (NAV) 75.23 (NAV)
3-year total return +18.21% +12.07%
3-year standard deviation 17.72% 11.84%
Min. initial investment 3,000.00 USD 50,000.00 USD
Net expense ratio 0.04% 0.16%
Total net assets 416.47bn USD 103.35bn USD
Morningstar category Large Blend Allocation–50% to 70% Equity

Which is Better, VFIAX or VWENX?

Community Answers:

Andrew L:

Tax-friendly funds like VFIAX can be held anywhere with no problem. Dividend generating funds like VWENX are best held in an IRA, if possible.

Brad S:

If you are going to invest in actively managed funds, they are best held in retirement accounts. Index funds are more tax-efficient and can be held in retirement or after-tax accounts.

Ed H:

Managed funds like VWENX usually produce dividends and capital gains, whereas index funds usually produce just dividends. So, it’s best to hold index funds in a taxable account unless you want the income.

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Diego, a seasoned financial analyst in New York, brings a decade of expertise to guiding financial decisions. As a blogger for UseFidelity.com, he simplifies finance, offering insights on Fidelity Investments. Beyond numbers, he explores NYC's culture and enjoys capturing moments through his photography.

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