We Compare SWTSX vs SWPPX:
Schwab Total Stock Market Index Fund (SWTSX) vs Schwab S&P 500 Index Fund (SWPPX)
SWTSX and SWPPX are both well-known mutual funds.
SWTSX tracks the US total stock market
SWPPX tracks the S&P 500 Index
These are two popular indexes in the United States. While this may not be a guarantee of the funds' performance, it is a huge advantage.
SWTSX and SWPPX have had outstanding performances in comparison to other major funds in the U.S. Aside from returns, the funds are identical in many other ways including management style.
SWTSX and SWPPX are both passively managed
Both funds tend to be strong options for a long-term portfolio, but which fund is better?
Let's consider the differences between the SWTSX and SWPPX in detail.
SWTSX vs SWPPX
The main difference between SWTSX and SWPPX is the index they track. SWTSX tracks the US Total Stock Market while SWPPX tracks the S&P 500 index.
SWTSX tracks the US Total Stock Market
SWPPX tracks the S&P 500 Index
Another big difference is the number of holdings in SWTSX and SWPPX.
SWTSX holds 3414 stocks
SWPPX holds 508 stocks
Lastly, their expense ratio is different.
SWTSX has an expense ratio of 0.03%
SWPPX has an expense ratio of 0.02%
Their expense ratio only differs by 0.01%.
SWTSX
- Tracks The Dow Jones US Total Stock Market Index
- Expense Ratio: 0.03%
- Number Of Stocks: 3414
SWPPX
- Tracks The S&P 500 Index
- Expense Ratio: 0.02%
- Number Of Stocks: 508
SWTSX vs SWPPX Performance
SWTSX and SWPPX have had similar performance returns over the last 5 years. This is because SWPPX makes up about 80% of SWTSX.
The total return for SWTSX over the last 5 years is 15.97% annually. The total return for SWPPX over the last 5 years is 16.75%. A difference of 0.78% annually.
Therefore, SWPPX is slightly outperforming SWTSX over the last 5 years and with a lower expense ratio.
Here is a chart illustrating this:
Here is SWTSX and SWPPX performance comparison:
Similarities between SWTSX and SWPPX:
- Low Expense Ratios (0.03% vs 0.02%)
- Charles Schwab Funds
- Similar Performance Returns
SWTSX and SWPPX Differences
SWTSX and SWPPX primarily differ in the index they track. SWPPX tracks the S&P 500. SWTSX tracks the US Total Stock Market.
They also have a different number of holdings. SWTSX holds more than 6 times as many stocks as SWPPX.
This makes SWTSX more diversified and in theory less volatile.
Both pay funds pay dividends annually.
Differences between SWTSX and SWPPX:
- Number Of Holdings (3,414 vs 508)
- Underlying Index
- Level Of Diversification
SWTSX Description
- Fund Inception: 1999
- Expense Ratio: 0.03%
- Number Of Stocks: 3,414
- Annual Dividend
Charles Schwab Total Stock Market Index Fund (SWTSX) is a mutual fund owned by Charles Schwab that attempts to track the performance of the entire U.S. stock market as calculated by the Dow Jones U.S. Total Stock Market Index.
The fund has an inception date of June 1999 and it is one of the easiest ways to gain exposure to the entire US market.
Morningstar categorizes SWTSX as a large blend fund and gives it a 4-star rating.
The fund has $18 billion in total net assets and a low portfolio turnover rate of 3.18%.
Charles Schwab's SWTSX has an expense ratio of 0.03%.
SWTSX Performance
Schwab's SWTSX has performed well over the last 10 years with an average yearly return of 14.92%. This is in line with its underlying index and with other large blend Morningstar category funds.
Over the long term, you can expect SWTSX to perform well as a passively managed total market fund.
There is no guarantee the next 10 years will look the same but SWTSX is a great fund to consider holding long-term.
SWTSX Holdings
The holdings for SWTSX are largely made up of Apple, Microsoft, Amazon, Google, and Meta and also provide exposure to over 3,000 other companies.
The sector with the highest percentage of portfolio for SWTSX is the technology sector with 28%.
SWTSX holdings are more spread out between large, mid, and small-cap companies compared to SWPPX.
SWPPX Description
- Fund Inception: 1997
- Expense Ratio: 0.02%
- Number Of Stocks: 508
- Annual Dividend
Schwab's S&P 500 Index Fund (SWPPX) aims to track the S&P 500 index. Most investors in SWPPX should purchase shares through the Schwab portal to avoid commissions.
The fund has no investment minimum and makes for a great core holding in a long-term portfolio.
By tracking the S&P 500, SWPPX gives access to 500 leading U.S. companies. It also captures close to 80% of the U.S. market.
Morningstar categorizes SWPPX as a large blend fund and gives it a 5-star rating.
The fund has $68 billion in total net assets and a low portfolio turnover rate of 1.77%.
Charles Schwab's SWPPX has an expense ratio of 0.02%.
SWPPX has a few ETF alternatives: SCHV and SCHX.
SWPPX Performance
Schwab's SWPPX aims to mimic the returns of the S&P 500 index. Therefore, SWPPX and the S&P 500 will always have the same returns.
Over the long term, you can expect SWPPX to perform well as a passively managed fund.
Again, there is no guarantee the next 10 years will look the same. However, SWPPX can be considered a great long-term hold.
SWPPX Holdings
The holdings for SWPPX are largely made up of Microsoft, Apple, Amazon, Google, and Tesla and also provide exposure to over 500 other companies.
The sector with the highest percentage of portfolio for SWPPX is the technology sector with 29%.
SWPPX holdings are weighted towards more large and mid-cap companies compared to SWTSX.
SWTSX and SWPPX Morningstar Rating
Morningstar is a well-known resource in the investment world. They rate funds on a scale of 1 to 5 depending on their risk-adjusted return.
This means they rate how well a fund performs compared to other funds in the same category. A category is the type of fund such as a large blend fund.
Both SWTSX and SWPPX are categorized as large blend funds.
SWTSX has a Morningstar rating of 4 stars
SWPPX has a Morningstar rating of 5 stars
This means Morningstar rates SWPPX higher than SWTSX for risk-adjusted returns.
SWTSX vs SWPPX What’s The Difference?
The main difference between SWTSX and SWPPX is the index they track. SWTSX tracks the US total stock market while SWPPX tracks the S&P 500 index.
There is also a big difference in net assets between SWTSX and SWPPX.
SWTSX Net Assets: $18.13B
SWPPX Net Assets: $68B
This gives SWPPX more liquidity compared to SWTSX.
These differences haven't had a big impact on their performance. SWTSX and SWPPX have performed almost identically over the last 5 years.
Here is a comparison chart:
The Schwab Total Stock Market Index Fund (SWTSX) is an index fund that tracks the Dow Jones U.S. Total Stock Market Index. It is an all-cap index containing over 3,000 companies listed on U.S. stock exchanges.
The Schwab S&P 500 Index Fund (SWPPX) is an index fund that tracks the S&P 500 index. It contains around 508 holdings.
SWTSX vs SWPPX Expense Ratio
The expense ratio of SWTSX is 0.03% while the expense ratio of SWPPX is 0.02%. This means for every $10,000 you invest in SWTSX in a year you would pay a $3 expense fee and for SWPPx, $2.
Both SWTSX and SWPPX have a very low expense ratio. A fee of $3 to $2 a year is small compared to the returns these funds have provided.
An average mutual fund will charge around 0.75% as an expense ratio.
Which Is Better SWTSX or SWPPX?
SWTSX and SWPPX are similar in performance. SWPPX offers exposure to the S&P 500 at a lower expense ratio of 0.02%. The issue with SWPPX is its number of holdings. 508 holdings for some investors might not be enough to consider their portfolio diversified.
SWTSX provides 6 times as many stocks in its fund which means more diversification. This also leads to less volatility.
Both funds can be purchased commission-free through the Charles Schwab platform.
It's very important investors purchase SWPPX or SWTSX commission-free. Fees can take away from your portfolio returns and compound over time.
SWPPX and SWTSX should perform similarly over the next 10 years. The expense ratio isn't a significant difference.
I prefer the increase in diversification so that's why I give the edge to SWTSX.
Similar Comparisons:
My Winner: SWTSX
My winner is SWTSX based on its incredible diversification. With one fund you can have exposure to the total US stock market and be sure to benefit from the companies future growth.
Having said that, I believe both SWTSX and SWPPX can be great investments to add to your portfolio. Both have performed well over the long term and have low expense ratios.
You should consider your investment goals and tolerance for risk when deciding between these two funds.