VFIAX vs. VOO are two very popular funds by Vanguard. When compared like for like, both assets have notable similarities, but a few differences distinguish one from the other.
If you are looking for long-term investment options, VFIAX vs. VOO are very good options because they are likely to appreciate several years down the line.
The managers of these securities do not invest in penny stocks or new startups but rather in established companies and IPOs of high-performance companies, so you know that their total return will pan out in due time.
The stocks under their belt are S&P 500 stocks, so their future value increases are all but guaranteed. While VFIAX is traditionally a mutual fund, VOO is also a mutual fund with stable large-cap stocks. This makes it more of an Exchange-Traded Fund (ETF) rather than a mutual fund.
In this post, we want to compare VFIAX vs. VOO to help you make an informed decision should you decide to go for any of them. If you are looking for stable securities with long-term value potential, you may want to read this analytical review till the end. It can make all the difference when maximizing your investment portfolio.
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VFIAX: Vanguard 500 Index Fund Admiral Shares
Vanguard 500 Index Fund Admiral Shares (VFIAX) is regarded as the very first index fund for individual investors in the industry. Investing in an S&P 500 index fund is an affordable way to buy high-class stocks in the US equity market even if you don’t have too many resources. That is exactly why VFIAX was created, to help individuals achieve market returns with lower costs.
This fund invests in 500 of the top-performing companies in the US that operate in different industries within the economy. And these industries form about 75% of the total stock market value. Talk about efficient diversification as an investment strategy, right?
VFIAX was created by Vanguard Securities and is one of the oldest mutual funds in existence. Their fund is highly diversified, which is a great feature since investors’ funds are diversified against risks.
This means that when one or a few stocks are impacted by market negativity, other securities in the portfolio will make up for the loss suffered. All in all, it is an excellent and safe investment, especially for the long term.
What makes VFIAX attractive for investors is that it has a very low expense ratio. This alone gives it an edge over other securities in the same category.
Here are the top ten holdings of VFIAX, that makeup 27.43% of its total asset
| Name | Percentage |
| Apple | 5.92% |
| Microsoft Corporation | 5.62% |
| Amazon Inc. | 4.06% |
| Facebook Class A | 2.29% |
| Alphabet Class A | 2.02% |
| Alphabet Class C | 1.97% |
| Berkshire Hathaway Class B | 1.44% |
| Tesla Inc. | 1.44% |
| NVIDIA | 1.37% |
| JP Morgan Chase & Co. | 1.30% |
VOO: Vanguard 500 Index Fund
Vanguard 500 Index Fund (VOO) is another Vanguard index fund created and is best described as an ETF. It tracks 500 of the largest companies in the US S&P 500 based on their market capitalization. This fund operates a cap system similar to many other funds in the same category being that the number of shares in its holding is multiplied by the price per share.
Essentially, the goal of this ETF is to track the index returns of these top companies. For instance, it has 100 shares of a company’s stock trading at $10, the total market cap for the stock is $1,000.
So what this fund does is invest in all the equities that make up the S&P 500 to ensure asset diversity and secure long-term value increase.
Just like VFIAX, VOO is an excellent find to invest in for the long term because your investments will be secure. It remains one of the more popular retirement investment plans for a lot of people.
Here is a table showing the top ten holdings of VOO with 33.40% of its total asset.
| Name | Percentage |
| Apple | 6.10% |
| Microsoft | 5.80% |
| Alphabet Inc. | 4.20% |
| Amazon Inc. | 4.20% |
| Amazon.com | 3.90% |
| Facebook Inc. | 2.20% |
| Tesla, Inc. | 1.70% |
| NVIDIA | 1.40% |
| Berkshire Hathaway | 1.40% |
| JP Morgan Chase & Co. | 1.30% |
| Johnson & Johnson | 1.20% |
VFIAX Vs. VOO: Key Differences
Despite being created by the same company, both assets have specific key differences. Understanding these differences will place you in a better position to decide which is best for you.
One of the major differences is that while VFIAX is a mutual fund, VOO is an ETF. That means that you can invest in VFIAX from $3,000, while you can invest in VOO starting from $1. Luckily, you can invest in VOO until you reach the $3,000 minimum and convert your shares to VFIAX tax-free.
That means that VOO is tradable and is far more in circulation than VFIAX. VFIAX being a mutual fund, means that the pricing is updated once per day. With VOO, you can trade any moment of the day.
VFIAX holds onto similar shares in the S&P 500, while VOO holds onto similar stocks in similar proportions. In that sense, they’re identical.
VFIAX Vs. VOO: Composition Differences
Now let’s quickly compare both funds by relying on hard data posted by both funds. From the table, you will notice how identical both funds are.
They trade in the same stocks, have the same dividend yield, and have the same returns over time.
| Categories | VFIAX | VOO |
| Telecommunication | 10.4% | 10.4% |
| Consumer Discretionary | 10.21% | 10.21% |
| Staples | 7.3% | 7.3% |
| Energy | 4.9% | 4.9% |
| Finance | 13.2% | 13.2% |
| Health Care | 13.7% | 13.7% |
| Industries | 9.3% | 9.3% |
| IT | 21.9% | 21.9% |
| Materials | 2.7% | 2.7% |
| Real Estate | 3.1% | 3.1% |
| Utilities | 3.3% | 3.3% |
| Type | Mutual Fund | Index Fund (ETF) |
| Investment category | Large Blend of Stocks | Large Blend of Stocks |
| Minimum investment | $3,000 | Provide per one share |
VFIAX Vs. VOO: Performance Differences
In this table, you will see the performance and returns of VFIAX vs. VOO.
| VFIAX | VOO | |
| YTD Returns | 18.37% | 18.37% |
| 1-Year Return | 18.37% | 18.37% |
| 3-Year Return | 14.14% | 14.14% |
| 5-Year Return | 15.18% | 15.19% |
| 10-Year Return | 13.85% | 13.84% |
| Since inception | 7.28% | 15.03% |
| SEC Yield | 1.50% | 1.51% |
VFIAX Vs. VOO: Fees
In terms of the management fees you pay for VFIAX vs. VOO, these are slightly different. Be mindful of these fees because, over 20 to 30 years, they could cost you a substantial sum of your earnings.
For instance, a fee of 2% may not look like much compared to another fund charging a fee of 0.05%. However, over the long term, the former may accumulate a lot of money which could eat up your goal portfolio value by half.
With that being said, both VFIAX and VOO have very low fees. VFIAX will cost you an expense ratio of 0.04%, and VOO will cost you a slightly lesser fee of 0.03%.
VFIAX Vs. VOO: Frequently Asked Questions
Here are some of the frequently asked questions that can help you better understand VFIAX and VOO.
Is VFIAX Better Than VOO?
That will depend on who you ask and what your investment habit is. In terms of the minimum investment requirement, you need to have at least $3000 before investing in VFIAX. However, for VOO, there is no minimum investment. So, if you don’t want to wait until you’ve saved up $3,000, know that you can invest in VOO and transfer the balance to VFIAX as soon as you reach $3,000.
For expense fees, VOO also charges a slightly lower 0.03% fee compared to VFIAX 0.04%. VOO and VFIAX both have low fees and invest in the same shares.
How Is VFIAX Different From VOO?
Both VFIAX vs. VOO are similar since they are both investing in the same shares, following the S&P 500. However, while VOO is an ETF, VFIAX is an S&P 500 mutual fund by Vanguard.
Is VFIAX A Good Buy Now?
As soon as you know you want to start investing, start. Time in the market is much more important than timing the market, so the sooner you start the better. Because historical results are no indication of future gains, and the market’s annual return is 7%, you’re leaving money on the table if you’re trying to time the market.
So if you buy and hold it, you will reap the rewards in the future. Based on the records, VFIAX has shown itself to be one of Vanguard Securities’ top-performing funds. On top of that, it only attracts an expense ratio of 0.04%, which is relatively low.
VFIAX Vs. VOO – Which Is Better?
There are so many investment strategies out there that can guide you as you take your investment journey. But remember that many investors will still advise you to first know your financial status, capacity, and overall plans. These will help you make an educated and informed decision on which fund to choose as your invested funds.
You already have won half the battle as you read all the finer details between VFIAX and VOO. Now is the time to understand which one is aligned with your financial goals.
Both offer their own set of advantages and disadvantages, and the deciding factor is you and your finances. What is important is that you consider one of these as these will surely help you achieve your financial independence.
So start your journey now and be there for the long haul. You have already started your first steps. Now you just need to take that leap into your investment journey.
Related Reads:
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- RSP Vs. SPY: What’s Right For You? [Comparing ETFs]
- VOO Vs. SPY: A Comparison Of Two S&P 500 ETFs
Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Radical FIRE, a personal finance platform, and Spark Nomad, a travel platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.