Total Market Index vs S&P500??

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dylphil21-1997
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Total Market Index vs S&P500??

Post by dylphil21-1997 »

I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
anil686
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Re: Total Market Index vs S&P500??

Post by anil686 »

Personally the ERs are roughly the same - but I prefer a total market fund - JMO though.... I like that it is the essence of market cap weighting of the US stock market rather than an excellent proxy for the market....
Johm221122
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Re: Total Market Index vs S&P500??

Post by Johm221122 »

Lots of posts on this, just use search feature
But Total stock market index because it's more diversified(it includes small/mid caps)
whereskyle
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Re: Total Market Index vs S&P500??

Post by whereskyle »

dylphil21-1997 wrote: Thu Apr 29, 2021 7:05 pm I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
Total market! Jack's preference. He chose the sp 500 as the Index for the original Index Fund because it was popular not because it was his personal preference. No reason to invest primarily in mega caps over mid and small unless you have a strategic reason to do so. Also, no reason to let a committee choose your stocks instead of the market as a whole. Tesla, Zoom, Square: Big stocks of late with huge runups outside of the sp 500. Why exclude them?
Last edited by whereskyle on Thu Apr 29, 2021 8:22 pm, edited 1 time in total.
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JoMoney
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Re: Total Market Index vs S&P500??

Post by JoMoney »

I think I'm in a minority here in that I prefer the S&P 500 Index to one of the many 'Total Market' indices.
I prefer the S&P methodology that has requirements seasoning of new issues and profitability that weeds out IPOs.

A "Total Market" index fund might track one of many slightly different indexes put out by different providers. I think Fidelity actually has two different 'Total Market' index funds *. I like the wide spread easy availability of the S&P 500 data.


* It looks like the FZROX uses the "Fidelity U.S. Total Investable Market Index" as it's index, and FSKAX uses the "Dow Jones U.S. Total Stock Market Index"
and those are just the Fidelity funds. I think Vanguard's "Total Market" fund has tracked 3 or 4 different 'US Total Market' indexes over it's life.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Dennisl
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Re: Total Market Index vs S&P500??

Post by Dennisl »

I say total market. Tesla price for jacked up on its entry into snp, whereas for total market you would’ve already owned it and it wouldn’t have mattered.
Mike Scott
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Re: Total Market Index vs S&P500??

Post by Mike Scott »

I like the idea of the greater diversity in a total market index but the returns say there is little to no difference between the two.
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Re: Total Market Index vs S&P500??

Post by Vanguard Fan 1367 »

dylphil21-1997 wrote: Thu Apr 29, 2021 7:05 pm I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
I own both Total Market Index funds and S&P 500 funds. I think they both are fabulous investments. They sure have been great since I first thought about investing in 1982.
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annu
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Re: Total Market Index vs S&P500??

Post by annu »

Probably can do same for fidelity as well, but I do VTSAX(Vanguard total market) as I do not like Tesla, or to be truthful tesla fanboys, so when I looked VTSAX vs VFIAX(SP500), below is what I see invested in Tesla was 1.3% to 1.5%, so went with VTSAX.
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Re: Total Market Index vs S&P500??

Post by rich126 »

Or just make your life more complicated and use both. :P
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Triple digit golfer
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Re: Total Market Index vs S&P500??

Post by Triple digit golfer »

annu wrote: Thu Apr 29, 2021 9:58 pm Probably can do same for fidelity as well, but I do VTSAX(Vanguard total market) as I do not like Tesla, or to be truthful tesla fanboys, so when I looked VTSAX vs VFIAX(SP500), below is what I see invested in Tesla was 1.3% to 1.5%, so went with VTSAX.
Did you use VFIAX prior to about six months ago? It had 0% Tesla then.
absolute zero
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Re: Total Market Index vs S&P500??

Post by absolute zero »

JoMoney wrote: Thu Apr 29, 2021 7:31 pm I think I'm in a minority here in that I prefer the S&P 500 Index to one of the many 'Total Market' indices.
I prefer the S&P methodology that has requirements seasoning of new issues and profitability that weeds out IPOs.

A "Total Market" index fund might track one of many slightly different indexes put out by different providers. I think Fidelity actually has two different 'Total Market' index funds *. I like the wide spread easy availability of the S&P 500 data.


* It looks like the FZROX uses the "Fidelity U.S. Total Investable Market Index" as it's index, and FSKAX uses the "Dow Jones U.S. Total Stock Market Index"
and those are just the Fidelity funds. I think Vanguard's "Total Market" fund has tracked 3 or 4 different 'US Total Market' indexes over it's life.
Could also get a small bit of exposure to profitability, *without* excluding small caps, by owning an S&P fund that tracks the S&P 1500 Index. Example: SPTM.

But I get your point. S&P500 funds are available anywhere and everywhere, which makes them convenient.
lazynovice
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Re: Total Market Index vs S&P500??

Post by lazynovice »

Total stock market unless your 401(k) does not provide it.
heyyou
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Re: Total Market Index vs S&P500??

Post by heyyou »

Are there any dollar differences (returns or expenses) in owning a TM fund versus a 500 fund?
Not that I know of, but each investor should do what suits them.
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Re: Total Market Index vs S&P500??

Post by TropikThunder »

JoMoney wrote: Thu Apr 29, 2021 7:31 pm I prefer the S&P methodology that has requirements seasoning of new issues and profitability that weeds out IPOs.
At least for VTI/VTSAX, total market index providers also have seasoning policies before an IPO is added to the index (usually quarterly) so they don't automatically start adding them either.
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JoMoney
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Re: Total Market Index vs S&P500??

Post by JoMoney »

TropikThunder wrote: Thu Apr 29, 2021 11:22 pm
JoMoney wrote: Thu Apr 29, 2021 7:31 pm I prefer the S&P methodology that has requirements seasoning of new issues and profitability that weeds out IPOs.
At least for VTI/VTSAX, total market index providers also have seasoning policies before an IPO is added to the index (usually quarterly) so they don't automatically start adding them either.
VTI/VTSAX use the CRSP index. If the IPO is a reasonably liquid stock large enough to be part of their "Small Cap" index it's eligible after the fifth day of trading:
http://www.crsp.org/files/Equity-Indexe ... uide_0.pdf
...
INITIAL PUBLIC OFFERINGS
A new security resulting from an IPO is considered for inclusion after trading regular-way for five days on a CRSP exchange
of interest. If the company’s total market capitalization is at least as large as the breakpoint of the CRSP US Small Cap
Index, then it is eligible to be added to the appropriate indexes after the close of the fifth day of trading as a “fast- track
IPO”. The company’s total company market capitalization is calculated using the closing price and shares outstanding
known on the first day of trading.
The company’s securities must also pass the eligibility and investability screens (however, for fast track IPOs, the minimum
FSO requirement is 10 percent, rather than 12.5 percent), as stated in the Creating the Index-Eligible US Equity Market
Universe section of Chapter 2.
Securities that do not qualify for fast-track inclusion will be reviewed for inclusion at the next scheduled ranking
I suppose seasoning for 5 days is still some amount of seasoning, but S&P requires at least 12 months, and a 'financial viability' screen of at least 4 consecutive quarters of positive earnings.

https://www.spglobal.com/spdji/en/docum ... ndices.pdf
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annu
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Re: Total Market Index vs S&P500??

Post by annu »

Triple digit golfer wrote: Thu Apr 29, 2021 10:07 pm
annu wrote: Thu Apr 29, 2021 9:58 pm Probably can do same for fidelity as well, but I do VTSAX(Vanguard total market) as I do not like Tesla, or to be truthful tesla fanboys, so when I looked VTSAX vs VFIAX(SP500), below is what I see invested in Tesla was 1.3% to 1.5%, so went with VTSAX.
Did you use VFIAX prior to about six months ago? It had 0% Tesla then.
No have always done VTSAX by default, , had opportunity to pick some bonus investment few months ago, so considered 500 for the first time as through work it was cheaper this year
3funder
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Re: Total Market Index vs S&P500??

Post by 3funder »

It makes little difference.
Global stocks, US bonds, and time.
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Re: Total Market Index vs S&P500??

Post by wolf359 »

dylphil21-1997 wrote: Thu Apr 29, 2021 7:05 pm I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
They're pretty much the same in terms of practical performance.

However, there is a version of the Fidelity Total Market Index that has zero expenses. If you're going to stay with Fidelity forever, pick that one. (FZROX)
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Re: Total Market Index vs S&P500??

Post by Independent George »

For all intents & purposes, a total market index & the S&P 500 perform about identically. They might be off by a percent or so every now and again, but in the long run they are interchangeable. For a long time, I used the S&P 500 specifically because the break room at the office was set on CNBC 24/7; if I heard about the S&P, I didn't have to mentally change gears from that to the total market index. It didn't matter from a practical standpoint, just a psychological one.
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Re: Total Market Index vs S&P500??

Post by chuckb84 »

VTSAX will slightly dilute your exposure to the FAANG stocks that dominate the S&P. It's not a big change, but slightly more diversification.
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Re: Total Market Index vs S&P500??

Post by ruralavalon »

dylphil21-1997 wrote: Thu Apr 29, 2021 7:05 pm I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
My personal preference is a total stock market index fund over a S&P 500 index fund because a little more diversified.

But historically the performance of the two types of funds has been almost identical. Sometimes one is ahead, sometimes the other is ahead. See:29 years history.

wolf359 wrote: Fri Apr 30, 2021 1:18 pmHowever, there is a version of the Fidelity Total Market Index that has zero expenses. If you're going to stay with Fidelity forever, pick that one. (FZROX)
The ZERO fund so far has not had any advantage in actual practice. 2+ years history.
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Re: Total Market Index vs S&P500??

Post by abuss368 »

dylphil21-1997 wrote: Thu Apr 29, 2021 7:05 pm I'm guessing most of you might say "whichever one has lower expenses"

But really!! What do y'all think, Fidelity Total Market Index or Fidelity 500 Index Fund?

Thank you
The difference over time is a rounding error. Jack Bogle has an excellent chapter in his book on this. Mr. Bogle will recommend Total Bond and Warren Buffett will recommend S&P 500. Combine that with Total Bond and you have an excellent portfolio.

I used an S&P 500 fund in an employer plan that was very high costs. It was the best option in the plan.

Tony
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Re: Total Market Index vs S&P500??

Post by Tattarrattat »

The returns are so close, it's inconsequential. I like SP500 for its history in the genesis of the index fund investing. Not a logical or rational choice but reassuring nonetheless. Like betting on Seabiscuit, or something.
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Re: Total Market Index vs S&P500??

Post by Somethingwitty92912 »

I’ve read this debate a number of times. It usually breaks down to total market because of diversified holdings, however I’ve long since been a pure 500 believer— because I like to separate the wheat from the chaff a little, so to speak.

By the time something is worth being on the S&P 500 it will be added, until then…well there’s a lot of trash out there, and I don’t want to own it. For me I need proof of concept.
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Re: Total Market Index vs S&P500??

Post by JoMoney »

I wonder why almost nobody brings up VTCLX the "Vanguard Tax-Managed Capital Appreciation Fund"
It's essentially the Russell 1000, with a slight tilt away from dividends, and has performance on par (maybe even slightly better) than Total Stock or S&P 500 indices.
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Re: Total Market Index vs S&P500??

Post by abuss368 »

For someone who values tracking, it is easy to see how the S&P 500 performs over any period of time.

Tony
Last edited by abuss368 on Thu May 06, 2021 7:07 pm, edited 1 time in total.
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Re: Total Market Index vs S&P500??

Post by Triple digit golfer »

The Vanguard Large Cap Index is another contender here. Performs closer to Total Stock than the 500 index has most of the time.
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Re: Total Market Index vs S&P500??

Post by abuss368 »

3funder wrote: Fri Apr 30, 2021 1:14 pm It makes little difference.
Agree and well said. I have held both at certain times and both work well. Round out with a bond fund and nothing else is needed.

Tony
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Re: Total Market Index vs S&P500??

Post by Triple digit golfer »

abuss368 wrote: Thu May 06, 2021 7:07 pm
3funder wrote: Fri Apr 30, 2021 1:14 pm It makes little difference.
Agree and well said. I have held both at certain times and both work well. Round out with a bond fund and nothing else is needed.

Tony
Round out the S&P 500 or Total Stock with an international equity fund, add a bond fund if you wish, and nothing else is needed. Vanguard, Fidelity, BlackRock, State Street, T. Rowe Price, JP Morgan, and others agree that a globally diversified equity portfolio is prudent.
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Re: Total Market Index vs S&P500??

Post by abuss368 »

JoMoney wrote: Sat May 01, 2021 10:47 am I wonder why almost nobody brings up VTCLX the "Vanguard Tax-Managed Capital Appreciation Fund"
It's essentially the Russell 1000, with a slight tilt away from dividends, and has performance on par (maybe even slightly better) than Total Stock or S&P 500 indices.
Good point. That is an excellent fund as well and avoids the under performance and risk of international investing. I have seen that work well with friends. One could buy that single fund and avoid any behavior risks.

Tony
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Re: Total Market Index vs S&P500??

Post by dogagility »

It makes little difference.
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Re: Total Market Index vs S&P500??

Post by Triple digit golfer »

abuss368 wrote: Thu May 06, 2021 8:10 pm
JoMoney wrote: Sat May 01, 2021 10:47 am I wonder why almost nobody brings up VTCLX the "Vanguard Tax-Managed Capital Appreciation Fund"
It's essentially the Russell 1000, with a slight tilt away from dividends, and has performance on par (maybe even slightly better) than Total Stock or S&P 500 indices.
Good point. That is an excellent fund as well and avoids the under performance and risk of international investing. I have seen that work well with friends. One could buy that single fund and avoid any behavior risks.

Tony
Has avoided underperformance. Past tense.
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Re: Total Market Index vs S&P500??

Post by abuss368 »

Somethingwitty92912 wrote: Sat May 01, 2021 10:45 am I’ve read this debate a number of times. It usually breaks down to total market because of diversified holdings, however I’ve long since been a pure 500 believer— because I like to separate the wheat from the chaff a little, so to speak.

By the time something is worth being on the S&P 500 it will be added, until then…well there’s a lot of trash out there, and I don’t want to own it. For me I need proof of concept.
I agree. I held an S&P 500 fund in a very bad and very high cost employer plan. It was the best option. Combined with a simple bond fund, that portfolio did extremely well.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Total Market Index vs S&P500??

Post by anon_investor »

Triple digit golfer wrote: Thu May 06, 2021 8:07 pm
abuss368 wrote: Thu May 06, 2021 7:07 pm
3funder wrote: Fri Apr 30, 2021 1:14 pm It makes little difference.
Agree and well said. I have held both at certain times and both work well. Round out with a bond fund and nothing else is needed.

Tony
Round out the S&P 500 or Total Stock with an international equity fund, add a bond fund if you wish, and nothing else is needed. Vanguard, Fidelity, BlackRock, State Street, T. Rowe Price, JP Morgan, and others agree that a globally diversified equity portfolio is prudent.
Don't forget the flawed emergency fund! :twisted:
Triple digit golfer
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Re: Total Market Index vs S&P500??

Post by Triple digit golfer »

anon_investor wrote: Thu May 06, 2021 9:08 pm
Triple digit golfer wrote: Thu May 06, 2021 8:07 pm
abuss368 wrote: Thu May 06, 2021 7:07 pm
3funder wrote: Fri Apr 30, 2021 1:14 pm It makes little difference.
Agree and well said. I have held both at certain times and both work well. Round out with a bond fund and nothing else is needed.

Tony
Round out the S&P 500 or Total Stock with an international equity fund, add a bond fund if you wish, and nothing else is needed. Vanguard, Fidelity, BlackRock, State Street, T. Rowe Price, JP Morgan, and others agree that a globally diversified equity portfolio is prudent.
Don't forget the flawed emergency fund! :twisted:
Have you read my thread on that topic? There were at least three unique thoughts in that 500+ post thread! That's two more than in the two fund thread!
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Re: Total Market Index vs S&P500??

Post by anon_investor »

Triple digit golfer wrote: Thu May 06, 2021 9:16 pm
anon_investor wrote: Thu May 06, 2021 9:08 pm
Triple digit golfer wrote: Thu May 06, 2021 8:07 pm
abuss368 wrote: Thu May 06, 2021 7:07 pm
3funder wrote: Fri Apr 30, 2021 1:14 pm It makes little difference.
Agree and well said. I have held both at certain times and both work well. Round out with a bond fund and nothing else is needed.

Tony
Round out the S&P 500 or Total Stock with an international equity fund, add a bond fund if you wish, and nothing else is needed. Vanguard, Fidelity, BlackRock, State Street, T. Rowe Price, JP Morgan, and others agree that a globally diversified equity portfolio is prudent.
Don't forget the flawed emergency fund! :twisted:
Have you read my thread on that topic? There were at least three unique thoughts in that 500+ post thread! That's two more than in the two fund thread!
Too bad it got locked!

I use Total Stock Market index (VTSAX), S&P500 index (VFIAX) and Large Cap index (VLCAX) as tax loss harvest partners. Long term performance is nearly identical.
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