Article compares S&P 500 ETFs, Vanguard VOO wins

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YRT70
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Article compares S&P 500 ETFs, Vanguard VOO wins

Post by YRT70 »

Thought this was a pretty interesting and detailed analysis. The differences are small (of course) but for longer buy and hold periods it can matter somewhat.
Best-In-Class S&P 500 ETF: Look To Vanguard For Top Indexed Returns

Summary
  • Vanguard's leadership in indexing and ETFs helps to keep management expenses low and returns higher than competitors.
  • Great AUM size and low transaction costs, when companies are shuffled in the S&P 500 index, are noteworthy.
  • For the buy-and-hold crowd, especially in tax-deferred accounts, the Vanguard S&P 500 ETF is a top choice.
https://seekingalpha.com/article/439059 ... ed-returns
UpperNwGuy
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by UpperNwGuy »

All that data serves to confirm what every boglehead should already have known.

I'm surprised the author didn't include the Fidelity 500 mutual fund in his comparison instead of the T Rowe Price fund.
Ferdinand2014
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by Ferdinand2014 »

It appears he is mostly looking at ETF’s only? I own FXAIX (Fidelity 500 index fund) expense ratio 0.015, AUM of 250 billion, has higher total return than VOO/VFIAX by a small margin over the last 10 years. Lifetime returns are not comparable because VFIAX has a different start date than FXAIX. Once you get to this level of expense and index tracking, the difference is very, very small. Interestingly, Morningstar gives VFIAX 5 star, yet the rank at 1,3, and 5 years is higher for FXAIX and the same at 10 years. Lipped ranks FXAIX in the top 4% and VFIAX in the top 6% the last 10 years. There would be a small advantage for VFIAX/VOO in taxable because of capital gains and a teeny advantage for FXAIX in tax deferred due to total return historically - likely secondary to its tiny expense ratio.

https://fundresearch.fidelity.com/fund- ... IX%2CVFIAX
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bluquark
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by bluquark »

Ferdinand2014 wrote: Sat Nov 21, 2020 6:11 pm Interestingly, Morningstar gives VFIAX 5 star, yet the rank at 1,3, and 5 years is higher for FXAIX and the same at 10 years.
Morningstar stars are arbitrary and meaningless for passive investments, as far as I can tell. I don't pay for Morningstar premium so I don't know what their analysts are thinking, but the ratings appear to be all over the place and don't match the criteria I use to pick and recommend funds (expense ratio, tracking error and bid/ask spread, mainly).
Last edited by bluquark on Sat Nov 21, 2020 6:54 pm, edited 4 times in total.
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Nate79
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by Nate79 »

It's amazing how much trash is published on the web these days.
bling
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by bling »

the phrase "tracking error" doesn't appear once in the article...
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by nisiprius »

The phrase "total stock market index fund" doesn't appear in the article, either.
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nisiprius
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by nisiprius »

"VOO should be near the top of your list for consideration." Then what, pray, ought to be at the very top of the list?
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JoMoney
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by JoMoney »

  • For the buy-and-hold crowd, especially in tax-deferred accounts, the Vanguard S&P 500 ETF is a top choice.
This doesn't make sense to me, the article discusses the tax benefits of VOO and the ETF structure, which only applies to taxable accounts, not "tax-deferred accounts" which really don't have tax impacts unless/until the owner withdraws the money.
If an investor had a lower cost S&P 500 option that's not as efficiently tax-managed (i.e Fidelity's 500 index), that might be preferred in a tax-deferred account.
Am I missing something, or is this just a type-o on the authors part?
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bluquark
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by bluquark »

It sounds like the article author is part of the community of day traders who love to do options and margin trades on SPY. Prior to doing a minimum of research on VOO, he blindly assumed SPY must be popular because it's the best fund. Whereas in reality, it's an high-expense-ratio product -- almost never recommended or even brought up by Bogleheads -- but since it was among the first ETFs ever created, it continues to benefit from network effects to drive a low bid/ask spread.

SPY is the strange outlier, whereas VOO is just one member of an almost indistinguishable crowd of similar high-quality index funds.
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Re: Article compares S&P 500 ETFs, Vanguard VOO wins

Post by grabiner »

Ferdinand2014 wrote: Sat Nov 21, 2020 6:11 pm Interestingly, Morningstar gives VFIAX 5 star, yet the rank at 1,3, and 5 years is higher for FXAIX and the same at 10 years.
The reason for the star difference is that the Fidelity fund doesn't have a 10-year history for this share class, so the 10-year performance is not included in the star rating.
Lipped ranks FXAIX in the top 4% and VFIAX in the top 6% the last 10 years.
Lipper has a category of S&P 500 index funds, which emphasizes the small differences between them.
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