The best S&P 500 index fund for you depends on where you hold the account and how much you are paying in fees
There is no single "best" S&P 500 index fund because the right choice depends on your brokerage, your account type, and what you are already paying. The three largest providers — Vanguard, Fidelity, and Schwab — each offer low-cost S&P 500 index funds with expense ratios under 0.04%. Within each brokerage, you will find multiple versions of the same index (one for regular taxable accounts, one for IRAs, one for employer plans), and the fund you can access depends on where your money sits.
The practical difference between the top funds is small — a few dollars per year on a $10,000 investment. What matters more is that you pick one and stay in it, because switching funds creates taxable events and trading costs. This section walks you through the three main providers and how to identify which fund is available to you.
Key Takeaways
- Vanguard's VTSAX (taxable accounts) and Fidelity's FSKAX (taxable accounts) both charge 0.03% annually and track the S&P 500 with nearly identical results.
- The fund you can buy depends on your brokerage: you cannot buy Vanguard funds at Fidelity without paying a transaction fee, and vice versa.
- Employer 401(k) plans offer their own S&P 500 index funds, often with expense ratios under 0.10%, and these are usually your lowest-cost option if available.
- The difference in annual cost between a 0.03% fund and a 0.20% fund is about $17 per year on a $10,000 investment, so focus first on finding a fund at your current brokerage rather than switching brokerages to save pennies.
- All S&P 500 index funds hold the same 500 companies in the same proportions, so performance differences are negligible and driven almost entirely by fees.
Vanguard S&P 500 Index Funds by Account Type
Vanguard offers three versions of its S&P 500 index fund, each designed for a different account structure. VTSAX is the mutual fund version for taxable brokerage accounts and IRAs held at Vanguard. It charges 0.03% annually, meaning you pay $3 per year on a $10,000 balance. VOO is the exchange-traded fund (ETF) version of the same fund, also at 0.03%, and trades like a stock on any brokerage that offers ETFs. VFIAX is Vanguard's version for employer 401(k) plans and similar retirement accounts.
The three funds track the same index and hold identical stocks, so their performance is virtually the same. The choice between them comes down to where your money is: if you have a Vanguard IRA, use VTSAX; if you want to buy through a non-Vanguard brokerage, use VOO; if your employer plan offers VFIAX, use that. Buying a Vanguard mutual fund at a non-Vanguard brokerage typically costs $49.95 per transaction, which wipes out years of fee savings on small accounts.
Fidelity S&P 500 Index Funds by Account Type
FSKAX is Fidelity's mutual fund for taxable accounts and IRAs, charging 0.03% annually — the same as Vanguard's VTSAX. FXAIX is Fidelity's version for employer 401(k) plans. SPLG is Fidelity's S&P 500 ETF, also at 0.03%, and can be bought at any brokerage that offers ETFs.
Fidelity's advantage is that you can hold FSKAX at Fidelity with no transaction fee, and Fidelity's brokerage account has no account minimums and no monthly fees. If you already have a Fidelity account for other reasons, FSKAX is when ready available to you. If your employer plan offers FXAIX, the cost is the same as FSKAX, so either works.
Schwab S&P 500 Index Funds by Account Type
SWTSX is Schwab's mutual fund for taxable accounts and IRAs, charging 0.03% annually. SWPPX is Schwab's version for employer 401(k) plans. SPLG (the same ticker as Fidelity's ETF) is available at Schwab as well, though Schwab's own mutual fund is simpler if you are not familiar with ETFs.
Schwab's brokerage account also has no minimums and no monthly fees. Like Fidelity, if you already have a Schwab account, SWTSX is when ready available. The three major providers are now so similar in cost and features that your choice often comes down to which brokerage you already use or prefer.
S&P 500 Index Funds in Employer 401(k) Plans
Most employer 401(k) plans offer at least one S&P 500 index fund option. These are often the lowest-cost funds available to you, with expense ratios ranging from 0.02% to 0.10%. Check your plan's investment menu (usually available through your employer's benefits website or the plan administrator's portal) and look for a fund with "S&P 500" or "Large Cap" in the name and an expense ratio under 0.15%.
If your plan offers a Vanguard, Fidelity, or Schwab S&P 500 index fund, the cost will be competitive with what you can buy on your own. If your plan offers a fund from a smaller provider, compare the expense ratio to the 0.03% benchmark. A 0.05% fund is still very cheap; a 0.20% fund is expensive by modern standards. If your plan's S&P 500 option is above 0.20%, ask your HR or benefits department whether a lower-cost option is available or planned.
How to Compare Funds When You Have a Choice
When you have multiple S&P 500 index funds to choose from, use this comparison table to narrow your options. The expense ratio is the only number that matters for index funds tracking the same index, because all three major providers hold the same 500 stocks in the same weights.
| Fund Name | Ticker | Account Type | Expense Ratio | Where to Buy |
|---|---|---|---|---|
| Vanguard S&P 500 ETF | VOO | Taxable, IRA | 0.03% | Any brokerage |
| Vanguard S&P 500 Mutual Fund | VTSAX | Taxable, IRA | 0.03% | Vanguard only (no fee) |
| Fidelity S&P 500 Mutual Fund | FSKAX | Taxable, IRA | 0.03% | Fidelity only (no fee) |
| Fidelity S&P 500 ETF | SPLG | Taxable, IRA | 0.03% | Any brokerage |
| Schwab S&P 500 Mutual Fund | SWTSX | Taxable, IRA | 0.03% | Schwab only (no fee) |
If you are comparing a 0.03% fund to a 0.05% fund, the difference is negligible — $2 per year on a $10,000 investment. If you are comparing a 0.03% fund to a 0.20% fund, the difference is real — $17 per year on $10,000 — but only if you can move your money without paying a transaction fee or triggering taxes. If moving costs you $50 in fees or creates a taxable event, stay where you are.
ETFs Versus Mutual Funds: Which Format to Choose
An ETF (exchange-traded fund) and a mutual fund can track the same index and charge the same fee, but they work differently. An ETF trades like a stock during market hours, so you can buy or sell it any time the market is open. A mutual fund processes all orders once per day after the market closes. For most investors buying and holding, this difference does not matter.
ETFs have one practical advantage: you can buy them at any brokerage without a transaction fee. Mutual funds sometimes charge a fee if you buy them outside their home brokerage — Vanguard charges $49.95 to buy VTSAX at Fidelity, for example. If you are starting fresh and do not have a brokerage yet, an ETF like VOO or SPLG gives you more flexibility to switch brokerages later without paying a fee.
If you already have a Vanguard, Fidelity, or Schwab account, the mutual fund version (VTSAX, FSKAX, or SWTSX) is simpler and has no transaction fee. Stick with what you have.
Frequently Asked Questions
Can I switch from one S&P 500 index fund to another?
Yes, but the cost depends on your account type. In a taxable brokerage account, selling one fund and buying another creates a taxable event if the fund has gained value, so you may owe capital gains tax. In an IRA or 401(k), you can switch between funds without tax consequences. If you are switching brokerages (say, from Vanguard to Fidelity), you will need to transfer the account or withdraw and deposit the cash, which may take a few days.
What if my employer plan does not offer an S&P 500 index fund?
Ask your benefits department or plan administrator whether one can be added. Many plans have added low-cost index options in recent years. If your plan does not offer an S&P 500 option, look for a "Total Stock Market" or "Large Cap" index fund with an expense ratio under 0.15%. These track slightly different indexes but hold most of the same companies and cost nearly as little.
Do I need to pick the absolute lowest-cost fund?
No. The difference between a 0.03% fund and a 0.05% fund is a few dollars per year on most accounts. What matters more is that you pick a fund under 0.15% and leave it alone. Switching funds frequently to chase tiny fee differences costs more in taxes and trading friction than you save.
Can I own S&P 500 index funds in multiple places at once?
Yes. Many people hold an S&P 500 index fund in their employer 401(k) and a separate one in an IRA or taxable brokerage account. There is no rule against owning the same index through multiple funds. The only downside is that you are spreading your money across multiple accounts, which can make rebalancing more complicated.
What is the difference between an S&P 500 fund and a Total Stock Market fund?
An S&P 500 fund holds 500 large U.S. companies. A Total Stock Market fund holds those 500 plus about 1,500 mid-size and small companies. Total Stock Market funds cost the same (around 0.03%) and perform similarly over long periods. If your plan offers only one, either is a solid choice. If you have to pick, S&P 500 is simpler and more widely available.