We Compare SWTSX vs VTSAX:
Schwab Total Stock Market Index Fund (SWTSX) vs Vanguard Total Stock Market Index Fund (VTSAX)
SWTSX and VTSAX are both well-known mutual funds.
SWTSX is a product of Charles Schwab
VTSAX is a product of Vanguard
These are two prominent brokerage companies in the United States. While this may not guarantee the funds' performance, it is a huge advantage.
SWTSX and VTSAX 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 VTSAX are both passively managed
Both funds are strong options for a long-term portfolio, but which fund is better? Let's consider the differences between the SWTSX and VTSAX in detail.
SWTSX Description
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.
Charles Schwab's SWTSX has an expense ratio of 0.03%.
SWTSX Performance & Returns
SWTSX Holdings
VTSAX Description
VTSAX is one of Vanguard's largest funds. Its purpose as a mutual fund is not different from the SWTSX. VTSAX seeks to track the performance of the entire U.S. stock market using a benchmark index that measures the stock market's investment return.
VTSAX adopts an indexing investment strategy to track the performance of the CRSP US Total Market Index. It holds a collection of securities that corresponds with the Index.
Vanguard's VTSAX has an expense ratio of 0.04%.
VTSAX Performance & Returns
VTSAX Holdings
SWTSX vs VTSAX What’s The Difference?
The main difference between SWTSX and VTSAX is the brokerage that offers the fund. SWTSX is offered by Charles Schwab while VTSAX is offered by Vanguard.
There is also a big difference in net assets between SWTSX and VTSAX.
SWTSX Net Assets: $18 Billion
VTSAX Net Assets: $329 Billion
These differences haven't impacted their performance. SWTSX and VTSAX have performed almost identically over the last 10 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.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) has the structure of a mutual fund.
Since VTSAX is passively managed, its performance is very similar to that of a mutual fund. The fund seeks to duplicate the performance of the entire U.S. stock market.
SWTSX and VTSAX are different in terms of structure, but they operate with the same focus. They try to emulate the performance of the U.S. stock market.
SWTSX vs VTSAX Expense Ratio
The expense ratio of SWTSX is 0.03%, while the expense ratio of VTSAX is 0.04%. This means for every $10,000 you invest in SWTSX in a year you would pay a $3 expense fee and for VTSAX, $4.
Both SWTSX and VTSAX have a very low expense ratio. A fee of $3 to $4 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.
Minimum Investment
As a first-time investor in SWTSX, you only need to have the price of one share as a minimum investment. This means that if SWTSX's share price is $50, you can invest in the fund for as little as $50.
For a first-time investment in VTSAX, you need to have a minimum of $3000. After that, you are at liberty to invest any amount you want.
So if you are starting small, you most likely know what the pick is here – SWTSX.
As an alternative, you could invest with no minimum requirement into VTSAX's ETF equivalent, VTI. Using a free platform like M1 Finance, you can invest for free into VTI. (Use this link for a $50 Bonus)
Net Assets/Holdings
SWTSX’s net asset is $18 billion, much less than VTSAX's net assets, which are around $329 billion. SWTSX and VTSAX are highly tradable and very liquid funds.
The gap, however, between the two is extremely wide and can affect performance.
Regarding holdings, VTSAX holds more securities, 3,525, while SWTSX's holdings are 3,414. Both funds imitate the U.S. entire stock market, but VTSAX is closer in resemblance.
Issuer
Charles Schwab issues SWTSX. Schwab is a notable multifunctional financial services provider in the United States.
The company occupies the same position as Vanguard in the oldest and most reputable investment companies list.
The issuer for VTSAX is Vanguard. Vanguard is a prominent name when discussing mutual and exchange-traded funds.
Popular Vanguard Funds:
It is the second-largest exchange-traded fund provider, following BlackRock's iShares, and the largest mutual funds provider in the world.
What makes a significant difference is the outstanding ownership structure of Vanguard.
Fund Composition
Fund composition has to do with how SWTSX and VTSAX are composed and distributed across capitalization levels. The differences here are minimal.
SWTSX Holdings
- 76.2% Large-Cap
- 17.5% Mid-Cap
- 6.3% Small-Cap
VTSAX Holdings
- 76.1% Large-Cap
- 17.5% Mid-Cap
- 6.4% Small-Cap
This is only a difference of 0.1% in the large-cap stocks, meaning SWTSX has 0.1% more large stocks.
SWTSX and VTSAX share a similar composition with the entire U.S. stock market.
Exposure
A fund's exposure is a crucial factor to consider when building your portfolio. You may be taking a real risk if the fund is exposed to only industries with sluggish growth and not diversified.
Returns on investment depend largely on this factor.
Since the two funds imitate the entire U.S. stock market, you can expect a very identical result in this case. The biggest sector in terms of exposure for the two funds is technology.
Next is healthcare and then financial services. Energy, utilities, and materials do not hold a significant percentage as all combined take only about 6-7% of the index's holdings.
VTSAX holds about 120 more companies than SWTSX, but these are very small companies with a tiny effect on the industry sector exposure.
In addition to other holdings, VTSAX includes real estate, particularly real estate investment trusts (REITs).
SWTSX vs VTSAX Analysis
Let's analyze the two funds in terms of volatility and max drawdown. These two metrics can be solid indicators of the fund's performance in the face of unfavorable market conditions and unstable economic situations.
Volatility
Here again, the observable differences are slight: VTSAX is slightly more volatile than SWTSX at 4.44% monthly volatility. This affected the annualized outcomes as VTSAX volatility is also higher than SWTSX's by 0.16%.
Volatility and drawdown will always have a connecting line.
From the table, the more volatile fund has more drawdown. Although, factors such as unfavorable market and economic situations are the major causes of a drawdown.
This drawdown result reflects an outcome from 2001 to 2020. The market crash of 2008/2009 must have been a considerable contributor.
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My Winner: VTSAX
SWTSX and VTSAX are almost identical. As a result of mirroring the entire U.S. stock market, they hold almost the same assets and therefore have identical exposure.
Their returns are also very similar.
However, their significant differences show in 3 areas:
- Brokerage
- Minimum Investment
- Net asset
You need $3,000 as a minimum investment to invest in VTSAX; that's against the price of a share which is the requirement to start investing in SWTSX. For tight-budget investors, this may mean a lot.
However, VTSAX may outperform its counterpart with a net asset of $329 billion. SWTSX has a relatively low net asset of $18 billion.
Factors like volatility, and expense ratio are key metrics, although the difference is not so much you may want to consider them before choosing SWTSX vs VTSAX.
My winner is VTSAX, based on my love for Vanguard. The expense ratio difference is likely negligible over the long term.
If you are having trouble meeting the minimum requirement for VTSAX, you can always invest in VTI using the free M1 Finance App.