VFIAX vs VOO: Which is Better For You?

Investing in mutual funds, index funds, and ETFs (exchange traded funds) is a fundamental part of long-term investing and any diversified portfolio. They are typically seen as safer investments when compared to individual stocks, mainly due to their diversification. 

Many of these funds aim to track specific indexes. Two examples of this are VOO which aims to track the S&P500 market index and VFIAX which aims to follow the same index. Since they both track the same index, it can be hard to figure out which might be a better investment when comparing VFIAX vs VOO. Below is a comparison of these two popular funds to help you reach a decision. 

VFIAX vs VOO: Issuer

When it comes to VFIAX vs VOO from an issuer standpoint, you’re dealing with the same firm. Both VOO and VFIAX are issued by Vanguard, the largest issuer of mutual funds in the world. They are also the second largest issuer of ETFs. Needless to say, you don’t get to be that large without knowing what you’re doing. When looking at VFIAX vs VOO from an issuer standpoint, there is no difference. 

VFIAX vs VOO: Underlying Index Followed

Many times, funds will attempt to track a certain index of the stock market. Some examples are the total stock market, Dow Jones Industrial Average, and the NASDAQ 100.

As mentioned early, VOO and VFIAX aim to track the S&P500 market index. The S&P 500 aims to track the 500 leading publicly traded US companies. Market cap is the primary criterion for a company to be included in the S&P 500 index fund, but it is not the only criterion. 

Investing in the top 500 companies in the U.S. will mean mostly large-cap stocks. However, there could be a few mid-cap and small cap investments as well. 

VFIAX vs VOO: Expense Ratios

Expense ratios can be a vital piece of information when deciding what fund to invest in. Even a small difference can become thousands of dollars over the course of investing in a fund for 10 or 20 years.

Essentially, with managed funds, there are expenses that go along with it. These expenses could be salaries to pay analysts or portfolio managers, management fees, rent for office space, and many others. Many funds will pass some or all of these expenses on to you, the investor. The amount that will be passed to you is shown as the expense ratio.

When looking at VFIAX vs VOO, there is not a significant difference in their expense ratios. While VOO maintains a very low-cost of .03%, VFIAX has an expense ratio of about .04%. Having only a .01% difference in expense ratios is about as minor a difference as you can get. Yes, that money could add up over time so it is something to consider. 

VFIAX vs VOO: Minimum Initial Investments

Minimum initial investments (MII) will vary per fund and firm. The minimum initial investment only applies to the first time you invest in a fund. Many funds require anywhere from $100 – $5000 or more for your first investment. After that, you are free to invest any amount you wish on subsequent investments with the same fund. 

VOO’s current MII is the asking price of one share on that trading day. To give you an idea, as of writing this, VOO stands at roughly $377 per share. 

VFIAX on the other hand has a minimum initial investment of $3,000. 

Depending on how much you are investing could be the deciding factor as there is a significant difference in your initial vesting amount between VFIAX vs VOO.

VFIAX vs VOO: Net Assets and Holdings

At this point, it should be noted that VFIAX vs VOO are essentially the same exact fund. VOO is offered as an ETF while VFIAX is offered as a mutual fund. With that in mind, each fund’s top ten holdings are essentially identical, see below. 

Top 10 Holdings:

img 627e672c1f3f5

Since VFIAX vs VOO are the same fund, just offered differently, they hold the same asset. At over $840 billion in assets under management, VFIAX vs VOO are one on the larger funds offered by Vanguard. 

VFIAX vs VOO: Compositions

As noted, these are the same fund, simply offered as a mutual fund for VFIAX and for VOO, offered as an ETF. Their compositions are exactly the same. 

VFIAX vs VOO: Overall Performance

Of course, what most investors will put at the top of their criteria when determining which fund to invest in will be performance! When looking at the performance of both VFIAX vs VOO, they are going to have the same performance overall. Both will be affected equally by any market volatility.

VFIAX vs VOO Performance:

img 627e672c733a4

VFIAX vs VOO: Which is better?

So if VFIAX vs VOO are the same exact fund, does it matter which you invest in? Sure it does! For starters, VOO being an ETF allows for you to execute trades during the trading day. With VFIAX being a mutual fund, you’d have to wait until after the market has closed and prices are settled before a trade can be executed. That might not seem like much, but it could be a significant factor to certain investors or if the market is volatile that day. 

The expense ratio’s are very similar, only having a .01% difference. That is really not much, but depending on how much you plan on investing, it is something to consider. 

The minimum initial investments are one of the most significant differences. VFIAX requires $3,000 while VOO only asks for the price of a single share, which right now sits in the $375 range. 

One other factor to consider is the ability to set up automatic investments. VFIAX allows investors to set up a regularly scheduled automatic investment. VOO does not allow investors to set that up, you’d have to manually make a trade each month to invest continuously with VOO.

VFIAX vs VOO: Final Thoughts

Both funds are backed by one of the largest asset managers of Vanguard. Either would make good additions to your investment portfolio. Nearly identical in every way, including dividend yields, holdings, and very similar expense ratios, you’re basically spilling hairs when it comes to most aspects of VFIAX vs VOO. 

The main difference is that VFIAX is a mutual fund while VOO is an exchange-traded fund. Mutual funds and etfs are very similar, but have a few differences worth looking into before investing. The minimum investment amounts and ability to setup automatic investing should also be considered when making your investment choice as well. 

More Fund Comparisons

VTI vs SPY

VTSAX vs SPY

VFIAX vs VOO

SPY vs SPYG

VTI vs VOO


Website | + posts