Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

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Topic Author
miles dewey
Posts: 16
Joined: Thu Dec 20, 2018 3:20 pm

Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by miles dewey » Wed May 15, 2019 3:46 am

Hi all -
I know that variations of this topic have been addressed ad nauseam, but I'm wondering if I should switch from FSKAX (Fidelity Total Market Index) to VTI (Vanguard Total Market ETF)? A year ago I invested 100K into FSKAX in a taxable account. I chose Fidelity mostly because there's an office right near my work, and I like the fact that it's tangible and accessible. I know that their performances are virtually identical, and their ER and dividend rate differences are fairly negligible (with a nod to Vanguard), but I'm still not clear regarding the eventual capital gains taxes, and how much of a savings the ETF would really be when I eventually sell. I'm 46 years old, and barring an unforeseen emergency I have no plan on touching this money for a good 12 to 15 years. I plan to add to it modestly over the years, starting at about 5K annually at this stage. Is it worth it to jump ship, or should I just stay put?
Thanks for any input.

camaro327
Posts: 263
Joined: Fri Dec 21, 2012 11:04 am

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by camaro327 » Wed May 15, 2019 4:59 am

FSKAX has an expense ratio of 0.015% vs VTI’s expense ratio of 0.03%. There might be some tracking error differences, but I don’t see any significant advantages or disadvantages either way.

If you invested a year ago I’m assuming the capital gains would be fairly small.

student
Posts: 3131
Joined: Fri Apr 03, 2015 6:58 am

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by student » Wed May 15, 2019 6:00 am

I would recommend you to stay put. Both are good companies.

Jack FFR1846
Posts: 9179
Joined: Tue Dec 31, 2013 7:05 am

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by Jack FFR1846 » Wed May 15, 2019 6:16 am

Don't do something, just stand there.
Bogle: Smart Beta is stupid

Ferdinand2014
Posts: 266
Joined: Mon Dec 17, 2018 6:49 pm
Location: New England

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by Ferdinand2014 » Wed May 15, 2019 6:23 am

miles dewey wrote:
Wed May 15, 2019 3:46 am
Hi all -
I know that variations of this topic have been addressed ad nauseam, but I'm wondering if I should switch from FSKAX (Fidelity Total Market Index) to VTI (Vanguard Total Market ETF)? A year ago I invested 100K into FSKAX in a taxable account. I chose Fidelity mostly because there's an office right near my work, and I like the fact that it's tangible and accessible. I know that their performances are virtually identical, and their ER and dividend rate differences are fairly negligible (with a nod to Vanguard), but I'm still not clear regarding the eventual capital gains taxes, and how much of a savings the ETF would really be when I eventually sell. I'm 46 years old, and barring an unforeseen emergency I have no plan on touching this money for a good 12 to 15 years. I plan to add to it modestly over the years, starting at about 5K annually at this stage. Is it worth it to jump ship, or should I just stay put?
Thanks for any input.
Based on the comments in your questions, I would stay put. You state you like the physical office, point out the super low expense ratio and almost perfect index tracking of FSKAX, etc. The capital gains difference if any would be most likely a minor difference akin to the difference in the expense ratio's. It would likely take a lot more than 5K a year to notice any meaningful difference. Disclosure: I use Fidelity for my rollover, SEP, brokerage, CMA and 529 accounts. I have been very happy with costs and customer service. I am sure Vanguard is excellent as well. Just my personal experience.

DA200
Posts: 206
Joined: Fri Feb 06, 2015 3:47 pm

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by DA200 » Wed May 15, 2019 6:26 am

miles dewey wrote:
Wed May 15, 2019 3:46 am
Hi all -
I know that variations of this topic have been addressed ad nauseam, but I'm wondering if I should switch from FSKAX (Fidelity Total Market Index) to VTI (Vanguard Total Market ETF)? A year ago I invested 100K into FSKAX in a taxable account. I chose Fidelity mostly because there's an office right near my work, and I like the fact that it's tangible and accessible. I know that their performances are virtually identical, and their ER and dividend rate differences are fairly negligible (with a nod to Vanguard), but I'm still not clear regarding the eventual capital gains taxes, and how much of a savings the ETF would really be when I eventually sell. I'm 46 years old, and barring an unforeseen emergency I have no plan on touching this money for a good 12 to 15 years. I plan to add to it modestly over the years, starting at about 5K annually at this stage. Is it worth it to jump ship, or should I just stay put?
Thanks for any input.
I would suggest staying at Fidelity, but start using ITOT etf which has had zero capital gains distributions in recent years (making it a very tax efficient total stock market fund).
See the following link and spreadsheet with detailed tax efficiency calculations for common Vanguard, iShares, Fidelity, Schwab etc. mutual funds and etfs:
viewtopic.php?t=242137
If your current unrealized capital gains are small I would sell FSKAX and buy ITOT. If capital gains are large I would stop reinvesting dividends and capital gains distributions and buy ITOT with those distrinutions.

ERguy101
Posts: 117
Joined: Sat Jul 04, 2015 11:09 am

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by ERguy101 » Wed May 15, 2019 7:51 am

DA200 wrote:
Wed May 15, 2019 6:26 am
miles dewey wrote:
Wed May 15, 2019 3:46 am
Hi all -
I know that variations of this topic have been addressed ad nauseam, but I'm wondering if I should switch from FSKAX (Fidelity Total Market Index) to VTI (Vanguard Total Market ETF)? A year ago I invested 100K into FSKAX in a taxable account. I chose Fidelity mostly because there's an office right near my work, and I like the fact that it's tangible and accessible. I know that their performances are virtually identical, and their ER and dividend rate differences are fairly negligible (with a nod to Vanguard), but I'm still not clear regarding the eventual capital gains taxes, and how much of a savings the ETF would really be when I eventually sell. I'm 46 years old, and barring an unforeseen emergency I have no plan on touching this money for a good 12 to 15 years. I plan to add to it modestly over the years, starting at about 5K annually at this stage. Is it worth it to jump ship, or should I just stay put?
Thanks for any input.
I would suggest staying at Fidelity, but start using ITOT etf which has had zero capital gains distributions in recent years (making it a very tax efficient total stock market fund).
See the following link and spreadsheet with detailed tax efficiency calculations for common Vanguard, iShares, Fidelity, Schwab etc. mutual funds and etfs:
viewtopic.php?t=242137
If your current unrealized capital gains are small I would sell FSKAX and buy ITOT. If capital gains are large I would stop reinvesting dividends and capital gains distributions and buy ITOT with those distrinutions.
I'm not challenging, I'm asking for an explanation. If ITOT doesn't pay capital gains, does that affect returns? Or how do you grow in value when a stock doesn't pay that?

stan1
Posts: 6818
Joined: Mon Oct 08, 2007 4:35 pm

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by stan1 » Wed May 15, 2019 8:01 am

ERguy101 wrote:
Wed May 15, 2019 7:51 am

I'm not challenging, I'm asking for an explanation. If ITOT doesn't pay capital gains, does that affect returns? Or how do you grow in value when a stock doesn't pay that?
Capital gains tax you owe on a sale of your holdings are different than capital gains distributions from a mutual fund. ITOT is unlikely to pay out annual capital gains distributions like an actively managed mutual fund. You still would pay capital gains tax on realized gains if and when you sell the ETF. A mutual fund may realize capital gains due to customer buy and sell transactions and those are reported as capital gains distributions. An ETF is structured differently. At a high level with an ETF taxes on capital gains are being deferred until you sell (or your heirs get stepped up cost basis and then the capital gains are untaxed).

Topic Author
miles dewey
Posts: 16
Joined: Thu Dec 20, 2018 3:20 pm

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by miles dewey » Wed May 15, 2019 4:42 pm

Thanks for all the advice. I think I'll likely convert it to an ITOT ETF (thanks, DA200). Unfortunately, FSKAX is almost exactly back to where it was when I purchased it a year ago (I purchased it at $80.80 a share and today it's at $80.44). It's earned $2,700 in dividends, so at least the capital gains tax would be negligible.
Of the four times I've visited the Fidelity office, I've only had one low-key sales pitch for a managed account -- overall everyone's been helpful and answered my concerned newbie questions with patience and insight.

DA200
Posts: 206
Joined: Fri Feb 06, 2015 3:47 pm

Re: Should I switch from Fidelity Total Market Index to a Vanguard Total Market ETF?

Post by DA200 » Wed May 15, 2019 7:26 pm

miles dewey wrote:
Wed May 15, 2019 4:42 pm
Thanks for all the advice. I think I'll likely convert it to an ITOT ETF (thanks, DA200). Unfortunately, FSKAX is almost exactly back to where it was when I purchased it a year ago (I purchased it at $80.80 a share and today it's at $80.44). It's earned $2,700 in dividends, so at least the capital gains tax would be negligible.
Of the four times I've visited the Fidelity office, I've only had one low-key sales pitch for a managed account -- overall everyone's been helpful and answered my concerned newbie questions with patience and insight.
Over the past 365 days FSKAX has generated 1.81% of dividends and 0.56% of capital gains distributions.
On a $100,000 investment this equates to $1,810 of dividends and $560 of capital gains distributions. By switching to ITOT you will eliminate the $560 of capital gains distributions each year. As your investment grows over the next 15 years (and you contribute more to the fund), you will appreciate having the more tax efficient ITOT etf.
Make the change now before your unrealized capital gains become positive!

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