FXAIX Vs. SPY: Which One Is For You?

If you are an investor looking to invest in financial securities, two funds you should consider are FXAIX vs. SPY. Here’s an in-depth comparison of the two to better understand which one is suited for your investment needs.

For those who like to invest in retirement funds, these securities can offer real value heading into the future. However, it is important to note that FXAIX and SPY attract different expense fees, so take this into account as you do your planning. 

With that out of the way, let’s do a deep dive into FXAIX vs. SPY.

Overview of FXAIX and SPY

While FXAIX is a mutual fund, SPY is an Exchange-Traded Fund (ETF). Both assets have an assortment of portfolios, and they provide their holders with short-term and especially long-term value. 

The major difference between both is their offering. SPY is an ETF that is widely circulated and traded by many more people than FXAIX. Holders of mutual funds like FXAIX are not as circulated and are held by far fewer people. 

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FXAIX: Fidelity® 500 Index Fund

FXAIX or Fidelity 500 Index Fund is a mutual fund created by Fidelity Investments to provide investment opportunities for investors. The future outcome of this mutual fund is heavily influenced by the performance of stocks in its portfolio, of which there are many.

The main goal of Fidelity’s investment in creating FXAIX is to invest about 80% of its assets in common stocks traded publicly on the floor of the United States stock markets. Most of the stocks held under FXAIX are a selection of high-performance S&P 500 index. 

Plus, the income earned by these funds in terms of dividends is paid to holders. Also, the managers of FXAIX may also lend part of the securities to earn income.

Overall, this mutual fund is managed using several tools and approaches, such as statistical sampling and stock selection. 

Also, it is interesting to note that FXAIX is one of the best performing funds created by Fidelity with a consistent track record as one of the best retirement funds with a 10-year return of 16.20% as of 2021. 

That’s a great factor when you consider past performance when choosing your investment options. However, always consider that past performance is no indication of future results. 

FXIAX has a net expense ratio of 0.02% and a rich blend of highly diverse US stocks. 

Here are the top 10 stocks held by FXAIX that makeup 27.76% of the total assets.

Name	Ratio
Apple	6.63%
Amazon Inc.	4.78%
Microsoft	5.67%
Facebook Inc Class A	2.24%
Alphabet Inc Class A	1.57%
Alphabet Inc Class C	1.54%
Berkshire Hathaway Class B	1.50%
Johnson & Johnson	1.40%
Procter & Gamble	1.23%
Visa Inc Class A	1.20%

SPY: SPDR S&P 500 ETF Trust

SPY or SPDR S&P 500 ETF Trust is the biggest ETF globally and tracks the S&P 500. SPY was first released as an ETF on January 22, 1994, and it also has the record of being the very first ETF to be listed in the US. 

The majority of the stocks are spread across 11 major sectors or industries, which makes it one of the most diversified ETFs on offer today.

Investing in appreciating assets with a widespread is a good thing because when you have a diversified portfolio, you’ll be less influenced when the price of a single stock drops. Ever since its launch, it has generated returns for holders. And in that time, right until the moment of writing, the annualized returns have been 14.71%. 

Since its inception till date, there have been three recessions, three bear runs, and the largest economic expansion in the history of the US. All this shows is that SPY is well grounded and has been so for close to three decades. 

It also has top holdings spread out across top-performing sectors of the US economy. The highest sector holding is technology with 27%, healthcare with 13%, and consumer stocks at 12%.

Here is a table of SPY’s top ten holdings by ratio with 27.96% of its total assets.

Name	Ratio
Apple	6.45%
Microsoft	5.65%
Amazon Inc.	4.77%
Facebook Class A	2.33%
Alphabet Inc Class A	1.79%
Alphabet Inc Class C	1.76%
Berkshire Hathaway Class B	1.48%
Johnson & Johnson	1.33%
Procter & Gamble	1.26%
NVIDIA	1.14%

FXAIX Vs. SPY: Key Differences

So what are the major differences between FXAIX vs. SPY? The differences are quite a few. For starters, FXAIX has a lower expense ratio of 0.02% compared to SPY, which is 0.09%. The former is a mutual fund while the latter is an ETF which is another major difference. 

Beyond these differences, another major difference is that SPY, an ETF, is widely circulated, unlike FXAIX. However, both are investments that hold similar stocks. 

FXAIX Vs. SPY: Composition Differences

Now let’s compare both assets side by side to give you a clear view of both. 

Categories	FXAIX	SPY
Security Type	Mutual Fund	ETF
Segment	N/A	Large Equity US Cap
Issuer	Fidelity Investments	State Street Global Advisors
Asset (Net)	$379.18 billion	$417.38 billion
Expense Ratio	0.02%	0.09%
Management	Passive	Passive

FXAIX Vs. SPY: Performance Differences

Both securities are high flyers in their own right, as you can see from the table below.

FXAIX Performance And Returns:

Performance	Returns
YTD Returns	26.77%
1-Month Return	3.58%
3-Month Return	5.15%
1-Year Return	31.18%
3-Year Return	23.49%
5-Year Return	16.67%
10-Year Return	17.32%

SPY Performance and Returns:

Performance	Returns
YTD Returns	15.25%
1-Month Return	2.25%
3-Month Return	8.36%
1- Year Return	40.90%
3-Year Return	18.51%
5-Year Return	17.51%
10-Year Return	14.71%

FXAIX Vs. SPY: Fees

Another way to compare FXAIX vs. SPY is to look at their fees. How much you pay as an expense fee will impact the compound growth of your investment. When analyzing portfolios, experts will tell you that fees are one of the biggest millers of growth. For those who are unaware, fees matter a lot regardless of their numbers. 

A 1% expense ratio fee may not look like much, but when spread over a 10, 20, 30 years period, it may eat deep into the value of your holdings. So if you are just getting started on portfolio investment, you want to be mindful of the fees the portfolio will cost you. 

For FXAIX vs. SPY, the expense fees are low for both funds, with FXAIX having the lowest of the duo.

FXAIX will cost you 0.02% per year, which is one of the lowest fees of all Fidelity Investments funds. As for SPY, the expense fee is higher at 0.09%. 

Both funds have their strengths and weaknesses, but if you were to make a choice based on fees alone in the FXAIX vs. SPY debate, it’s obvious that FXAIX will give you a better deal based on fees.

FXAIX Vs. SPY: Frequently Asked Questions

Here are some frequently asked questions about FXAIX vs. SPY answered below:

Is FXAIX A Good Fund?

For investors looking for stability and long-term growth, FXAIX is a good mutual fund to invest in. This find has an assortment of high-value S&P 500 stocks. The expense ratio is also very low at 0.02%, which means you get to keep a large chunk of your earnings. 

Does FXAIX Pay Dividends?

Yes, it does. Currently, the dividend yield is 1.24%. Over the last ten years, the fund has been consistent on this front, with a payout averaging 2% of its value.

Is FXAIX The Same As SPY?

No, FXAIX is not the same as SPY. FXAIX is a mutual fund, while SPY is an ETF. While FXAIX has a much lower circulation ratio, SPY is widely spread because it is an ETF. But both have a portfolio of top-performing US stocks.

What Is The Average Return For SPY?

SPY recently posted a one-year return of 40.90%. Over the last ten years, the annualized returns have been 14.71%.

Is SPY A Safe ETF?

Over the long term, the annualized returns have been above 10%, but short-term declines may exceed 20%. However, it has a very solid reputation for being a top-performing ETF with close to 3 decades of existence.

FXAIX Vs. SPY: Which One Is For You?

Exchange-traded products are consistently part of investment strategies. So, if you want to earn passively managed income, choosing between FXAIX or SPY is dependent on your investment objective. 

Now that you know the details between these two managed funds, you need to understand where you are right now in terms of your financial capacity, status, and plans. Use that to make an educated decision of which fund you wish to trade before investing your hard-earned money.

Each has its own pros and cons. So it really depends on how you diversify your investment portfolio. In the end, what matters is that you make the right moves to reach your financial goals. It all starts with learning about these options so you can make the best decision for yourself. So buckle up and enjoy your investment journey!

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