It can be difficult to decide between two popular S&P 500 index funds. If you are looking for a comparison between FXAIX and SPY, this blog post is for you.
We will compare the two based on their expense ratios, performance, and overall objective.
FXAIX: Fidelity 500 Index Fund
The Fidelity 500 Index Fund is a mutual fund that seeks to mirror the performance of the S&P 500 Index.
FXAIX invests in large-cap stocks that are publicly traded in the United States.
SPY: SPDR S&P 500 ETF Trust
The SPDR S&P 500 ETF Trust (SPY) is an exchange-traded fund (ETF) that tracks the performance of the S&P 500 Index, a stock market index of 500 large-cap companies traded in the United States.
SPY is one of the world’s biggest and most popular ETFs, with assets under management totaling over $300 billion.
SPY is a passively managed ETF, meaning it seeks to track the performance of its underlying index (in this case, the S&P 500 Index) by investing in all or a representative sample of the stocks that make up the index. SPY is tradable and can be bought and sold like any other equity.
FXAIX vs SPY: Key differences
There are a few key differences between FXAIX and SPY.
Firstly, FXAIX is cheaper than SPY. For starters, you’re looking at a 0.09% in annualized fees vs. 0.02%. The Fidelity 500 Index Fund is cheaper in that regard.
Another key difference is that FXAIX is a mutual fund, whereas SPY is an ETF. This means investors can trade shares of SPY throughout the trading day, while mutual funds like FXAIX can only be bought and sold at the end of the trading day.
Other than what we mentioned above, you can expect similar dividend yields, performance, and holdings from SPY and FXAIX.
FXAIX vs SPY: Which Fund is Better?
SPY and FXAIX are passively managed funds that track the S&P 500 Index. They both invest in all 500 of the largest U.S. companies, weighted according to their market capitalization.
It’s still important to point out that the expense ratio of FXAIX is lower than SPY. While insignificant, the 0.07% difference can affect your portfolio return over time.
That being said, FXAIX is a more cost-effective pick for long-term investors.