Vanguard Total Stock Market Index Fund vs. Vanguard 500 Index Fund: An Overview
Two of Vanguard's astir fashionable products are—the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard 500 Index Fund Admiral Shares (VFIAX). While some tin relation arsenic suitable core holdings successful a banal portfolio, these similar-sounding mutual funds prosecute antithetic concern strategies.
As its sanction implies, the Total Stock Market Index Fund provides vulnerability to the full U.S. equities market, arsenic represented by the Center for Research successful Security Prices (CRSP) U.S. Total Market Index of astir 4,000 stocks.
On the different hand, the 500 Index Fund lone provides vulnerability to 500 of the largest U.S. companies, akin to the S&P 500 Index. In this article, we'll reappraisal immoderate of the similarities and differences betwixt these 2 fashionable Vanguard communal funds.
Note that determination are 2 classes of the Vanguard Total Stock Market Index Fund and Vanguard 500 Index Fund—the Admiral shares and the Investor shares. The Investor shares of some funds—the Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) and Vanguard 500 Index Fund Investor Shares (VFINX) are nary longer unfastened for caller investment. The lone quality betwixt the Admiral and Investor stock funds is the minimum required investment.
Key Takeaways
- Though some are broad-based equity communal funds, the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard 500 Index Fund Admiral Shares person antithetic concern objectives.
- The Vanguard Total Stock Market Index Fund invests successful the full U.S. equities market, consisting of thousands of publically traded companies.
- The Vanguard 500 Index Fund invests solely successful the 500 largest U.S. firms that comprise the S&P 500 index.
- The Vanguard Total Stock Market Index Fund could correspond each of a portfolio's equity holdings, portion the Vanguard 500 Index Fund should ideally beryllium counterbalanced with assertive maturation stocks.
Vanguard Total Stock Market Index Fund (VTSAX)
The Vanguard Total Stock Market Index Fund (VTSAX) is simply a communal money that provides diversified vulnerability to small-, mid-, and large-cap maturation and worth stocks traded connected the Nasdaq and New York Stock Exchange (NYSE).
The money employs a typical sampling attack to approximate the full scale and its cardinal characteristics.
As of December 30, 2021 the money held 4,149 stocks and controlled nett assets of $300 billion. Technology, financial, industrial, wellness care, and user work companies marque up its largest holdings. VTSAX charges an extremely debased disbursal ratio of 0.04% and requires a minimum concern of $3,000.
Top 10 Holdings
The apical 10 holdings of VTSAX are (as of extremity of twelvemonth 2021):
| Apple Inc | 5.54 |
| Microsoft Corp | 5.3 |
| Amazon.com Inc | 3.22 |
| Tesla Inc | 1.96 |
| Alphabet Inc Class A | 1.83 |
| NVIDIA Corp | 1.66 |
| Alphabet Inc Class C | 1.65 |
| Meta Platforms Inc Class A | 1.65 |
| Berkshire Hathaway Inc Class B | 1.02 |
| JPMorgan Chase & Co | 1.01 |
Both the Vanguard Total Stock Market Index and the Vanguard 500 Index communal funds are besides disposable arsenic exchange-traded funds (ETFs).
Vanguard 500 Index Fund (VFIAX)
The archetypal scale money for idiosyncratic investors, according to the company, the Vanguard 500 Index Fund (VFIAX) provides vulnerability to a subset of the full U.S. equity market—specifically, the Standard & Poor's 500 Index, whose constituent companies relationship for astir three-fourths of the U.S. banal market’s value.
The Vanguard 500 Index Fund seeks to replicate its benchmark scale by investing its full nett assets successful the stocks comprising the scale and holding each constituent with astir the aforesaid value arsenic the index. In this way, the money hardly deviates from the S&P 500, which it is designed to mimic.
As of December 30, 2021, the Vanguard 500 Index Fund had $280 cardinal successful full nett assets and, contempt its name, holds 512 stocks. Like its sister fund, VTSAX charges an disbursal ratio of 0.04% and requires a minimum concern of $3,000.
Top 10 Holdings
The apical 10 holdings of VFIAX are (as of extremity of twelvemonth 2021):
| Apple Inc | 6.67 |
| Microsoft Corp | 6.39 |
| Amazon.com Inc | 3.93 |
| Tesla Inc | 2.39 |
| Alphabet Inc Class A | 2.2 |
| NVIDIA Corp | 2.09 |
| Alphabet Inc Class C | 2.06 |
| Meta Platforms Inc Class A | 1.99 |
| Berkshire Hathaway Inc Class B | 1.32 |
| JPMorgan Chase & Co | 1.22 |
Note that the apical 10 holdings successful some funds are the aforesaid (although with antithetic portfolio weights).
Key Differences
In examination to the Vanguard Total Stock Market Index Fund, the Vanguard 500 Index Fund has historically experienced somewhat little volatility and return. However, the Sharpe ratios (the astir wide utilized method for calculating risk-adjusted return) are astir identical, which indicates that investors successful some funds had akin returns connected a risk-adjusted basis.
The Vanguard Total Stock Market Index Fund is champion suited for moderately to highly risk-tolerant investors seeking low-cost vulnerability to the U.S. banal market. Additionally, it could relation arsenic a azygous home equity money successful a portfolio.
Meanwhile, the Vanguard 500 Index Fund is suitable arsenic a halfway equity holding for investors with a semipermanent concern skyline and a penchant for the little hazard of the large-cap equity market. Since it does ore connected much conservative, large-cap stocks, the money mightiness enactment champion successful a diversified portfolio that contains vulnerability to different types of equities for growth.
What Is the Fidelity VTSAX Equivalent?
Fidelity offers a communal money that is broadly akin to Vanguard's VTSAX: the Fidelity ZERO Total Market Index Fund (FZROX)
How Can I Invest successful the VTSAX?
VTSAX tin beryllium purchased straight done Vanguard oregon via your broker's communal money portal. There is besides an ETF equivalent to VTSAX: the Vanguard Total Stock Market ETF (VTI)
What Are VTSAX ETF Equivalents?
In summation to the VTI determination are respective different wide marketplace ETFs including Schwab's Broad Market ETF (SCHB) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT).
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