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Frequent Contributor

Fidelity vs VG index funds

Except for minor ER differences, I assume they are essentially the same? Not exactly ... comparing Fidelity FSPGX (LG index) to Vanguard VIGAX, the funds’ holdings and charts aren’t the same (FSPGX holds many more stocks) ... but close.

But if one wants to use an OEF and not an ETF, I assume the simple thing is to just use the in-house offering, i.e., FSPGX or VIGAX depending upon where one is buying?

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Explorer ○○

Re: Fidelity vs VG index funds


@chang wrote:

 

But if one wants to use an OEF and not an ETF, I assume the simple thing is to just use the in-house offering, i.e., FSPGX or VIGAX depending upon where one is buying?

 


That's always been my take. I lack Vanguard accounts, so use Fido OEFs and occasionally Vanguard ETFs.

You might check the specific so-called "benchmarks" that the OEF intends to track. They can differ.

As far as I can tell, the differences are well down into the noise and coin-flip territory---which of course doesn't stop me from "analyzing" in a laughable attempt to detect differences, when my "problem" is that I can't stop analyzing.

Does that sound remotely familiar?

 

 

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Frequent Contributor

Re: Fidelity vs VG index funds

FSPGX follows R1000 Growth Index.

VIGAX follows CRSP LC Growth Index. Among other differences, CRSP index changes are never sudden but gradual and unannounced [Russell indexes are poor in these regards].

Index funds can also differ in other ways - sampling vs full index replication; use to futures to manage anticipated cash flows; securities lending; reinvestment timing of dividends.

YBB
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Frequent Contributor

Re: Fidelity vs VG index funds

@yogibearbull Yes, I see a noticeable difference in turnover ratio between the two.
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Participant ○○○

Re: Fidelity vs VG index funds

@chang ,

The turnover difference is due in part to buffer zones that VIGAX uses to rebalance which gives leeway instead of all at once changes. 

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Participant ○○

Re: Fidelity vs VG index funds

 

I compared the Tax Cost Ratio of Schwab 500 Index SWPPX to Vanguard 500 Index VFINX.

 

TaxCost Ratio SWPPX vs VFINX.png

 

I was surprised to see that over 1, 3, and 5 years, VFINX was more tax-efficient. I expected the Tax Cost Ratio to be approximately the same.

The only explanation that I can see is that under Dividends & Distributions (Summary tab), SWPPX paid out capital gains distributions for 2015, 2016, 2017, 2018, and 2019, whereas VFIAX did not.

https://www.schwab.com/public/schwab/investing/investment_help/investment_research/mutual_fund_resea...

https://www.schwab.com/public/schwab/investing/investment_help/investment_research/mutual_fund_resea...

Do you agree with this analysis and are there more explanations why VFIAX is more tax-efficient than SWPPX.

Hootz

 

 

 

 

 

 

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Participant ○○○

Re: Fidelity vs VG index funds

@Hootz,

I do agree with you.

Vanguard ETFs and index funds tend to be more tax-efficient than conventional index mutual funds because of their unique in-kind creation/redemption process.

https://advisors.vanguard.com/insights/article/taxtimeconsidervanguardetfstoimprovetaxefficiency

Fishingrod

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Participant ○○

Re: Fidelity vs VG index funds


@Fishingrod wrote:

@Hootz,

I do agree with you.

Vanguard ETFs and index funds tend to be more tax-efficient than conventional index mutual funds because of their unique in-kind creation/redemption process.

https://advisors.vanguard.com/insights/article/taxtimeconsidervanguardetfstoimprovetaxefficiency

Fishingrod

 


@Fishingrod 

I'm weak in math but if you have $1M in a 500 index fund and are in a 24% tax bracket, it would seem that the difference in the Tax Cost Ratios can add up to a few nice dinners. chang, YBB, someone?

Hootz

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Frequent Contributor

Re: Fidelity vs VG index funds

I did buy a Fido index fund, FSPGX (Lg Growth) last week, in my Fido taxable account. I prefer the OEF, since I’m not looking for any trading flexibility here. Although it tracks a different index than VIGAX / VUG, the differences seem insignificant. The Fido fund is actually a little cheaper and less concentrated in its top ten holdings, which seems appealing.

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Frequent Contributor

Re: Fidelity vs VG index funds


@Fishingrod wrote:

https://advisors.vanguard.com/insights/article/taxtimeconsidervanguardetfstoimprovetaxefficiency


@Fishingrod Excellent link!

I wonder why VG offers 3 entire suites of ETFs that track separate index families - CSRP, S&P and Russell. Obviously this means offering a ton of ETFs (which they do). Never mind all the OEFs...

Since all 3 index families are similar, why doesn’t VG just take a view on which one they think makes the most sense for investors (or would be the cheapest to track) and put their eggs in that basket.

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Frequent Contributor

Re: Fidelity vs VG index funds [Indexing]

VG made a huge business out of ETFs. In some cases, it started institutional OEFs just to have ETFs as their special classes [VG patented model in the US]. S&P and Russell are big indexers, so VG has ETFs related to those [e.g. LC, MC, SC, etc]. CRSP [origin at U Chicago] & FTSE replaced MSCI that VG dumped a few years ago - basically, VG supported MSCI in its early days within MS, but when an independent MSCI wanted to raise prices, VG just cut it off and went with much newer CRSP and also established FTSE.

RAFI is another major indexer but it uses non-market-cap or fundamental or factor-based indexes. VG doesn't have ETFs related  to those but has hired people from RAFI. Now VG has a small number of its own factor-based ETFs.

Some fund families have moved to internalized/in-house indexes but that is a controversial practice with potential conflicts.

YBB
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