VTI vs FZROX

Investing
#1

Hello everyone,

I’m 21, and I have about 100k invested in VTI at Vanguard. I plan to hold it long term, of course.

Today, I found out about FZROX, basically Fidelity’s version of VTI. What appealed to me was the 0% expense ratio, compared to VTI’s 0.03% expense ratio.

I know that I would only be saving $3 for every $10,000 I have invested (so like $30/year currently) comparing the difference in expense ratios. However, if I’m holding for 10,20, or even 30 years, I’m thinking that it might be a significant difference in the long run, but I’d like you hear your opinion on the topic.

Should I try to convert everything over to FZROX since it has a 0% expense ratio? Or should I just keep investing in VTI?

I look forward to hearing your guys opinions!

#2

I wouldn’t. 0.03% is so close to 0% that we’re talking about rounding error. And there are some other internal factors at play, like how closely the fund adheres to the index. For example, VTI contains 3,531 stocks whereas FZROX contains 2,443 stocks. So while they’re both “total market index funds”, they might happen to behave 0.03% or more different on any given year, regardless of the fees.

Also, based on the fact that you’re 21 and have 100K, I suspect it’s in a regular/taxable brokerage account (not an IRA or 401k?). If so there might be an ever so slight tax advantage to holding the ETF version over the index fund version.

PLUS, I think there’s value to “staying the course”. Any sort of jumping around is more likely to hurt you than help you. You picked VTI for a reason, stick with it. (If you asked the opposite question, I’d likely tell you to stick with FZROX)

FZROX is new, so the track record is limited, but here’s a look at how they compare to each other since January of 2019:

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They’re so close, you can’t even see both lines. So I’d leave it alone and let it grow for a few decades!

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#3

Thank you so much for the reply Jeremy!

That makes a lot of sense, I will take your advice and stick with VTI in my Vanguard account.

To clarify, I have 100k total invested in VTI (12k of it is in my Roth IRA, and the remaining 88k is in my taxable account). Of course I always max out my Roth IRA contribution first, and the leftover investments just go into the taxable account.

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