If you’re an investor looking to dive into financial securities, you might want to consider FXAIX and SPY. Let’s compare these two to help you decide which one suits your investment needs.
FXAIX is a mutual fund, whereas SPY is an Exchange-Traded Fund (ETF). Both offer a diverse range of portfolios and can provide significant value, especially in the long term. The main difference between them is their distribution. SPY, being an ETF, is widely traded by many more people compared to FXAIX, a mutual fund, which is held by fewer investors.
For those interested in retirement funds, both securities offer substantial future value. However, keep in mind that FXAIX and SPY come with different expense fees, which is crucial for your financial planning.
FXAIX, also known as the Fidelity 500 Index Fund, is a mutual fund created by Fidelity Investments. Its performance is closely tied to the stocks in its portfolio, primarily high-performing S&P 500 stocks. The fund aims to invest about 80% of its assets in publicly traded U.S. stocks. Income from these investments, like dividends, is paid to holders, and the fund managers may also lend securities to earn additional income.
FXAIX is managed using various tools and approaches, including statistical sampling and stock selection. It’s one of Fidelity’s best-performing funds with a solid track record, showing a 10-year return of 16.20% as of 2021. However, remember that past performance doesn’t guarantee future results. FXAIX has a net expense ratio of 0.02% and includes a diverse range of U.S. stocks.
On the other hand, SPY or SPDR S&P 500 ETF Trust is the largest ETF in the world and tracks the S&P 500. Launched on January 22, 1994, it was the first ETF listed in the U.S. SPY’s holdings are spread across 11 major sectors, making it highly diversified. This diversification helps reduce the impact of a single stock’s price drop on your portfolio. Since its inception, SPY has generated annualized returns of 14.71%.
SPY has weathered three recessions, three bear markets, and the largest economic expansion in U.S. history, proving its resilience over nearly three decades. Its top holdings are spread across sectors like technology (27%), healthcare (13%), and consumer stocks (12%).
When comparing FXAIX and SPY, there are several key differences. FXAIX has a lower expense ratio of 0.02% compared to SPY’s 0.09%. Additionally, FXAIX is a mutual fund, while SPY is an ETF, which affects their circulation and trading volume. Both funds hold similar stocks, but SPY is more widely traded.
Expense fees are a significant factor to consider as they can impact the compound growth of your investment. Even a seemingly small fee can add up over time, affecting your overall returns. FXAIX has one of the lowest fees at 0.02% per year, while SPY’s fee is 0.09%. If you’re choosing based on fees alone, FXAIX offers a better deal.
For investors seeking stability and long-term growth, FXAIX is a solid mutual fund with a low expense ratio and a portfolio of high-value S&P 500 stocks. It currently has a dividend yield of 1.24%, with a consistent payout averaging 2% over the last decade.
FXAIX and SPY are not the same; FXAIX is a mutual fund, and SPY is an ETF. SPY is more widely traded, but both hold top-performing U.S. stocks. SPY recently posted a one-year return of 40.90%, with annualized returns of 14.71% over the last decade. Despite short-term declines, SPY has a strong reputation as a top-performing ETF with nearly 30 years of history.
Choosing between FXAIX and SPY depends on your investment goals. Understand your financial capacity, status, and plans to make an informed decision. Each fund has its pros and cons, so consider how they fit into your overall investment strategy. Ultimately, the goal is to make the right moves to achieve your financial objectives. Start by learning about these options to make the best decision for yourself and enjoy your investment journey!