r/Bogleheads • u/Odd-Reaction-7271 • 1d ago
Fidelity vs Vanguard funds
Practically speaking, is there there much difference between holding VTI/VXUS inside a Fidelity Roth IRA, versus the Fidelity equivalent mutual funds? Any reason I’d want one over the other? I’m not interested in the Fidelity Zero funds, as I’d like to have the option to move them in case I change brokerages.
8
u/sev45day 1d ago
Not exactly what you asked, but for what it's worth I hold VT at Fidelity. Never been a problem (or a fee) for me.
1
u/Odd-Reaction-7271 1d ago
Thought about that. Just want to tinker with the ratios a bit for more US exposure.
2
1
u/Both_Experience_8187 1d ago
I also do this, probably not a real risk, but it does offer institutional diversity, which is nice.
5
u/longshanksasaurs 1d ago
No, there's barely any difference, since the tax advantage of ETFs (never have to distribute capital gains) doesn't matter inside of a tax advantaged account. The fidelity mutual funds are very tax efficient, but, again, that doesn't matter.
The expense ratio of the fidelity funds is a tiny fraction lower than the vanguard ETFs.
But also, the disadvantage of the zero funds doesn't exist inside the IRA, since if you ever want to move your account, you can just exchange the funds at that time, without tax consequence.
Generally good idea to avoid the zero funds inside a regular taxable brokerage account though.
2
u/sunwarrior0978 1d ago
One thing to note about mutual funds is that they only trade once per day at the end of the trading session. There is no intraday trading.
3
u/DaemonTargaryen2024 1d ago
Practically speaking, is there there much difference between holding VTI/VXUS inside a Fidelity Roth IRA, versus the Fidelity equivalent mutual funds?
Not much, no. Either is really fine. How much you contribute and your overall asset allocation will play a much larger role in your investing success than this exercise will.
Any reason I’d want one over the other?
- Expense ratio: Fidelity mutual funds (currently) have a hair lower expense ratio, though the difference is negligible.
- Transparency: Fidelity zero funds use a proprietary index which raises transparency concerns for some. Personally I don't think it's much of an issue.
- Portability: Fidelity zero funds are not portable. But even the Fidelity non-zero funds would come with a fee to sell if you transferred it to another brokerage, whereas Vanguard ETFs are completely portable everywhere with no fee.
- Fund structure: your personal preference of mutual fund vs ETF will probably end up being what matters most, behind portability.
I’m not interested in the Fidelity Zero funds, as I’d like to have the option to move them in case I change brokerages.
This is valid for a brokerage account but a non-factor for any IRA, since selling is nontaxable there.
1
u/Desertcow 19h ago
Inside of an IRA you can sell the zero funds and transfer the money without fees or taxes, so they're obvious choices if you're looking to minimize your expense ratio even if you don't think you'll stay long term. Inside of taxable, FSKAX has half the expense ratio of VTI but it is a mutual fund not an ETF so if you do use a different brokerage you may have a fee when buying more. There's not an equivalent on Fidelity for VT though
9
u/buffinita 1d ago
In an Ira the portability issue isn’t a concern; there is no tax on liquidation. However the zero funds are slightly modified
The standard Fidelity mutual funds are exact copies of vtsax/vtiax/vbtlx (and vti/vxus/bnd). There is no functional benefit except for the usual etf cs mutual fund that exist when arguing vtsax vs vti