FXAIX Vs. VFIAX – Which Is The Better S&P 500 Fund?

If you are into index fund investing, you probably would have heard of FXAIX and VFIAX. Both are very popular in the investor community because they track high-value stocks. Here’s a detailed comparison of FXAIX vs. VFIAX.

Diversification and proper allocation are two common themes to look into when you’re determining your investment strategy.  But what kind of stock funds or indexes should you look into to follow these practices?

Having investment options is very important when deciding where to hedge your funds.  In this review, we will discuss FXAIX vs. VFIAX, which may lessen the challenge you are facing for your portfolio.

FXAIX Vs. VFIAX: Overview

FXAIX is a creation of Fidelity Investments, and it is one of the best performing funds in the securities market.

On the other hand, VFIAX was created by Vanguard Securities. They have a collection of S&P 500 stocks covering various industries. They also form the core portfolio of many retirement funds.

Since they are quite similar in structure and performance, many investors have difficulty figuring out which duo to go for. To help you reach an informed decision, we review FXAIX vs. VFIAX below.

Before we go into details, here are some investment platforms that can help you with your investment needs.

  • Empower – is a free online platform that helps you track your investments and gives recommendations to pay the lowest fees possible. Read our full Empower review for more information about the platform.
  • M1 Finance – is a stock and ETF brokerage that helps you invest in stocks for as low as $100. With no trading or brokerage fees. Check out our M1 Finance review and learn more about the platform’s services and start investing now!

Try M1 Finance Today

FXAIX: Fidelity® 500 Index Fund

FXAIX or Fidelity 500 Index Fund is a fund created in 2011 by Fidelity Investments. This index fund is created to track the Standard & Poor’s 500 Total Market Index stocks. This index simply categorizes 500 of the top stocks with the highest market cap in the US stock market. 

Besides acquiring top stocks, FXAIX is also into security lending to generate income for investors. Due to its highly diversified structure, FXAIX is less prone to industry-wide market volatility. With so many stocks, numbering more than 500 and spread across different holdings, investors’ funds spread among many industries and stocks.

The strategy deployed by the managers of FXAIX is simple. They use sampling techniques to select the stock to include in the portfolio. Stocks are chosen based on their current projected value, dividend yields over a time period, and many other factors. 

It is also important to note that the stocks in the S&P 500 are the ones with the highest market cap in the US stock market. As an investor, this fund grants you access to the US stock market, where highly profitable stocks are bought and sold.

FXAIX invests about 80% of its assets in these stocks. When you skim through its stock holdings, as you will see in the table below, you will find many highly profitable companies spread across different industries like finance, IT, energy, and more. 

It is also one of Fidelity’s most popular funds, with a total net value of $399.36 billion across 508 different stocks. You will also be interested in knowing that FXAIX has a very low expense ratio and regularly generates dividends for investors.

So if you are looking to invest in index funds for the long term, FXAIX remains one of the best options for your retirement portfolio.

Man Investing MSN computer working stock market
Image Credit: iwatchwater/Depositphotos.

Here are FXAIX top 10 holdings representing 27.76% of all assets:

AssetPercentage
Microsoft Corp.6.36%
Apple Inc.6.00%
Amazon.com Inc.3.75%
Tesla Inc.2.31%
Alphabet Inc. Class A2.27%
Alphabet Inc. Class C2.13%
Meta Platforms Inc. Class A1.97%
NVIDIA Corp.1.63%
Berkshire Hathaway Inc. Class B1.36%
JPMorgan Chase & Co.1.30%

VFIAX: Vanguard 500 Index Fund Admiral Shares

VFIAX or Vanguard 500 Index Fund Admiral Shares is a mutual fund created by Vanguard in November 2000. This fund is one of the oldest funds of its kind and also one of the biggest. 

Just like FXAIX, VFIAX tracks the performance of stocks in the S&P 500 index and replicates the index.

Of all the index funds in the US securities market, VFIAX is one of the oldest and the most followed. Many investors use it as a benchmark for tracking US stocks because of its extensive data. 

The fund covers about 80% of all S&P 500 and is highly diversified. Another factor that makes it highly attractive for investors is its low expense ratio of 0.04%. So if you invest in VFIAX, the expense ratio will not take a significant portion of your investment at the end of maturity.

VFIAX investors also like how the fund speeds across highly profitable stocks in the US stock market. As of this writing, VFIAX has funds invested in about 507 different companies with a net value of $753.41 billion.

Some investors may struggle with its minimum investment requirement. The minimum requirement is $3,000 as an initial investment.

As you will see from subsequent data in this review, the fund has not disappointed investors thus far. It has remained consistent in offering year-on-year value to investors. It has also delivered dividends to investors consistently, which is good news if you are looking for value appreciation above anything else.

Here are the top 10 holdings for VFIAX:

AssetPercentage
Apple Inc.5.92%
Microsoft Corp.5.62%
Amazon.com Inc.4.06%
Meta Platforms Inc. Class A2.29%
Alphabet Inc. Class A2.02%
Alphabet Inc. Class C1.97%
Berkshire Hathaway Inc. Class B1.44%
Tesla Inc.1.44%
NVIDIA Corp.1.37%
JPMorgan Chase & Co.1.30%

FXAIX Vs. VFIAX: Key Differences

FXAIX vs. VFIAX are largely the same. They are index funds and are largely structured similarly since they track the same stocks in the S&P 500 Stock Market Index. However, they have certain differences that set them apart.

The first difference is in their expense ratio. FXAIX has a ratio of 0.015%, while VFIAX has a ratio of 0.04%. These differences are razor-thin, but they impact performance over a long period since VFIAX investors will pay more fees than an FXAIX investor.

Another difference is their initial investment requirement. While FXAIX doesn’t have such a requirement, the starting investment for VFIAX is $3,000.

These two differences are, by and large, the most significant ones. And they impact performance in the long run. It is also noteworthy that FXAIX is a creation of Fidelity investment while VFIAX is a creation of Vanguard.

Stock Market Graph Financial Data Statistic finance Background
Image credit: wing-wing/Depositphotos.

FXAIX Vs. VFIAX: Composition Differences

Let’s review their structure in detail to give you a clearer idea of how FXAIX vs. VFIAX stack up against each other.

CategoryFXAIXVFIAX
TypeIndex FundIndex Fund
SegmentLarge BlendLarge Blend
IssuerFidelity InvestmentsVanguard
Net Assets$399.36 billion$753.41 billion
Expense Ratio0.015%0.04%
StylePassivePassive
Dividend Yield1.26%1.33%
Minimum investmentN/A$3,000

FXAIX Vs. VFIAX: Performance Differences

Let’s now review their performance independently:

FXAIX Performance & Returns

ReturnsPercentage
YTD Returns-5.03%
1-Month Return-3.25%
3-Month Return-3.50%
1-Year Return17.09%
3-Year Return20.68%
5-Year Return18.22%
10-Year Return15.10%

VFIAX Performance & Returns

ReturnsPercentage
YTD Returns-5.03%
1-Month Return-3.26%
3-Month-3.51%
1-Year Return17.06%
3-Year Return20.66%
5-Year Return18.19%
10-Year Return15.07%

FXAIX Vs. VFIAX: Fees

Both may be index funds, but they don’t charge the same fees. FXAIX will cost you an expense ratio of 0.015%, while VFIAX will cost you 0.04%.

FXAIX Vs. VFIAX – Frequently Asked Questions

Here are some questions that will help you better understand FXAIX vs. VFIAX.

Is VFIAX Or FXAIX Better?

That will depend on your investment preference, to be honest. Both of these funds are index funds, and they post similar returns. FXAIX just has a slightly lower expense ratio than VFIAX. If you are judging on that basis alone, then FXAIX is better.

Is FXAIX A Good Fund?

Yes, it is a good fund. Its expense ratio is low, and it pays dividends every year. Besides that, it is a highly diversified fund, so it is secure.

What Is The Vanguard Equivalent of FXAIX?

Vanguard’s equivalent of Fidelity investment’s FXAIX is VFIAX.

FXAIX Vs. VFIAX – Which Is The Better S&P 500 Fund?

So which one is better for you? Which commodity will help you as part of your investment strategy? Which will help boost your retirement accounts so that financial independence is within reach? 

Despite the volatility of these index funds, these managed funds will help you build up your investment portfolio. So long as it is within your risk tolerance and capitalization to invest in either of these funds, you can be sure that a high yield and long-term portfolio growth are within reach.

Related Reads:

Want to start investing with no fees? Start your investment journey with M1 Finance today!

Invest For Free At M1 Finance