Title: Fidelity Total Market Index Fund (FSKAX) vs. Fidelity 500 Index Fund (FXAIX) - A Comprehensive Comparison (2024)

Introduction:

In the realm of US Large Blend funds, two titans stand tall, vying for the attention of discerning investors. The Fidelity Total Market Index Fund (FSKAX) and the Fidelity 500 Index Fund (FXAIX) both offer exceptional opportunities for growth and returns. In this comprehensive comparison, we will dissect these investment giants to assist you in making an informed decision.

Key Differences:

1. Index Tracking:

   • FSKAX tracks the entire U.S. stock market, encompassing a broad spectrum of stocks.
   • FXAIX, on the other hand, shadows the iconic S&P 500 Index, representing the 500 largest publicly-traded companies in the U.S.

2. Number of Holdings:

   • FSKAX diversifies across a staggering 3,875 holdings, providing an extensive representation of the market.
   • FXAIX, while focused on the S&P 500, holds 508 of the most prominent companies.

Performance Analysis:

Over the past decade, both FSKAX and FXAIX have demonstrated remarkable performance. While FXAIX has marginally outperformed FSKAX by 0.29% annually, it's important to note that this variance is relatively minimal, making both funds strong contenders.

Comparing Key Metrics:

1. Fund Type:

   • FSKAX and FXAIX both fall under the category of large U.S. stock blend funds.
   • They are flagship offerings from Fidelity, reflecting similar attributes, including minimum investment requirements and expense ratios.

2. Fund Size:

   • FSKAX manages assets worth $45 billion, while FXAIX commands a colossal $224 billion in assets.
   • The sheer size of these funds underscores the trust investors place in them, which is a significant factor to consider when selecting an investment vehicle.

3. Expense Ratio:

   • Fees can substantially impact portfolio growth over time. Both FSKAX and FXAIX share the same low expense ratio of 0.015%, which is commendably low, allowing you to retain more of your investment gains.

Understanding Mutual Funds:

A mutual fund is a collective investment pool that draws funds from numerous investors to be deployed in various securities like stocks, bonds, and short-term debts. When you invest in a mutual fund, your capital is amalgamated with that of other investors, and the fund's managers make strategic investments to generate returns.

Key Benefits of Mutual Funds:

1. Diversification:

   • Diversifying your investments across a wide range of companies and industries mitigates risk.
   • Mutual funds excel in this aspect, spreading investments across sectors to enhance stability.

2. Low-Cost Investments:

   • Achieving higher returns with lower expenses is a fundamental goal of investing.
   • Both FSKAX and FXAIX, with their meager expense ratios, support this objective effectively.

3. Liquidity:

   • Liquidity is the ease with which you can convert investments into cash. Mutual funds offer high liquidity.
   • Investors can readily redeem their mutual fund shares, providing flexibility and accessibility.

FSKAX - A Closer Look:

FSKAX mirrors the Dow Jones U.S. Total Stock Market, boasting over 3,000 stocks in its portfolio. Its consistent performance in the multi-cap category and broad diversity of holdings make it an attractive choice for investors.

• Fund Inception: 1997
• Expense Ratio: 0.015%
• Number of Stocks: 3,875

Comparatively, FSKAX not only shares an identical expense ratio with FXAIX but also boasts significantly higher returns.

FXAIX - A Deeper Dive:

FXAIX, designed for exposure to the S&P 500, offers cost-effective access to top-performing companies across various sectors. Approximately 80% of FXAIX's holdings align with the common stocks found in the S&P 500 Index.

• Fund Inception: 1988
• Expense Ratio: 0.015%
• Number of Stocks: 508

FXAIX closely tracks the performance and composition of the S&P 500 Index, making it a suitable choice for investors who seek a slice of the largest companies traded in the U.S.

Conclusion:

In the showdown between FSKAX and FXAIX, FSKAX emerges as the winner due to its more extensive diversification, boasting 3,875 holdings compared to FXAIX's 508. Both funds share the same low expense ratio, ensuring that you retain more of your hard-earned money in your portfolio. While both FSKAX and FXAIX are commendable choices, the choice ultimately depends on your investment objectives and risk tolerance.

In this era of data-driven decision-making, understanding the nuances of these investment giants is essential. Whether you opt for the broad market appeal of FSKAX or the targeted focus of FXAIX, rest assured that Fidelity has you covered.