Fidelity offers a new (as of 2016) index fund, the Vanguard Institutional S&P Index Tracker. It appears almost identical to VTI. I could invest in VTI instead via BrokerageLink. Any reason to prefer one over the other, other than the fact that VTI has been around much longer? VTI expense is 0.04% while the other is 0.01%.
S&P 500 is top 500 companies. VTI approximates entire u.s. market, a few thousand companies. So they’re not identical though their performance will be similar. You’ll do great with either one. Theoretically you’ll get slightly higher performance by including the extended market, but past results do not guarantee future performance. If you’re looking to approximate total market, you can also look for an extended market fund from Fidelity to augment your S&P 500 fund, and invest in roughly a 75/25 ratio. I’m assuming you’re talking about your 401k (because the fund you’re talking about is probably a Vanguard fund and not a Fidelity fund.) Otherwise, you can buy directly from Fidelity something close to VTI such as FSKAX, or their newer product FZROX.
Thanks! Yes, this is for my 401(k). I will check out the additional Fidelity funds you listed-they are not offered by default in the 401(k) plan I could always buy them through brokerage link. Any reason to be cautious about index funds that have only been around a year or two versus 10+ years?
I don’t think so but I don’t really know. Obviously they don’t have a history which could be concerning to some. But history doesn’t necessarily mean anything for future operation of any fund. So if they track an index that you want to invest in and they keep expenses low and don’t do anything shady, you’ll probably be good with any of them. For 401k at MSFT I’m pretty sure they have other Vanguard trusts as well, which track Russell 2000 index for example. That will get you exposure to small cap to balance out exposure to large cap in S&P 500. You can even do Russell 1000 and Russell 2000 (if they have those) to approximate the total market. I think in that case you do 90% Russell 1000 and 10% Russell 2000, and you have essentially a very similar investment to VTI, as you have the top 3000 U.S. stocks roughly weighed by market capitalization.
Wait I thought this should be similar to VOO and I have my 401k allocated in this fund lol. Is this not true?
VTI is total stock market. VOO is equivalent S&P 500.