VTSAX vs SWTSX: Which Fund Offers Better Returns?

Index funds are becoming increasingly popular due to their cost-effective and diversified approach. Two widely recognized index funds are VTSAX (Vanguard Total Stock Market Index Fund) and SWTSX (Schwab Total Stock Market Index Fund). 

A comparison is intended to be made based on their general characteristics, investment options and user habits. In this content for you, we will examine the historical performance, holdings and sector diversification of these funds to determine which one might be a better choice for investors.

We will answer frequently asked questions and draw a roadmap based on your habits and desires. 


What is VTSAX (Vanguard Total Stock Market Index Fund)?

VTSAX aims to track the CRSP U.S. Total Market Index, which includes almost all publicly traded companies in the United States. The fund has a low expense ratio and has outperformed its benchmark index over several years. VTSAX’s primary holdings are concentrated in the technology, healthcare and financial sectors.

What is SWTSX (Schwab Total Stock Market Index Fund)?

SWTSX aims to track the Dow Jones US Total Stock Market Index, which includes almost all publicly traded US companies. Like VTSAX, SWTSX has a low expense ratio and has historically performed well because it closely tracks its benchmark index. The fund’s primary holdings are in the technology, healthcare and consumer cyclical sectors.

Comparing VTSAX vs SWTSX

VTSAX and SWTSX are two index funds that are popular among investors with a low-cost and diversified approach. The differences between these funds can help investors determine which fund better suits their investment objectives and risk tolerance.

VTSAX and SWTSX have some important differences. VTSAX has a slightly lower expense ratio, while SWTSX requires a lower minimum investment. 

Historically, VTSAX has slightly outperformed SWTSX, but the performance difference is minimal. Both funds have similar sector diversification, with a focus on the technology, healthcare and financial sectors.

VTSAX and SWTSX – Which Should You Choose?

Investors can include VTSAX and SWTSX in their investment strategy depending on their preferences. An investor with a long investment horizon may prefer VTSAX due to its slightly better historical performance. In contrast, an investor with a smaller initial investment may prefer SWTSX as it requires a lower minimum investment.

Another issue arises when analyzing VTSAX and SWTSX in terms of investment strategies. VTSAX and SWTSX offer investors the opportunity to build an investment portfolio that suits their different investment objectives and risk tolerances. The low expense ratios and similar sector diversification of both funds allow investors to make a cost-effective and balanced investment. Investors can achieve greater diversification by investing in these two funds separately or together, depending on their risk tolerance and target returns.

What Are The Limitations and Risks?

Investing in index funds, including VTSAX and SWTSX, involves certain risks and limitations. These funds may be subject to market fluctuations and may not perform well during periods of poor market performance. Investors may not achieve the desired level of diversification by investing in only one index fund.

VTSAX and SWTSX have similarities and differences. Both offer low expense ratios, historically strong performance and comparable sector diversification. Investors should consider their investment objectives and risk tolerance when choosing one of these funds. Investing in both funds as part of a diversified portfolio can be beneficial.


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Winfried S. Krantz

Financial Writer Hello, my name is Winfried Krantz and I am a banking analyst and finance journalist with expertise in economics, finance, and cryptocurrency. With over 5 years of experience in the industry, I have a deep understanding of how these fields interact and influence each other. I received my BSc in Finance, Accounting, and Management from the University of Nottingham, where I honed my skills in financial analysis and reporting. Since then, I have worked with a number of leading publications, sharing my insights and helping readers stay up-to-date with the latest trends and developments in the world of finance.

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