ETFs are a great way to add instant diversification to your portfolio. These investment vehicles pool investor funds to buy a chunk of various assets, offering exposure to a broad range of securities in a single investment. Among the most popular ETFs are S&P 500 index funds, which provide investors with exposure to the 500 largest publicly traded companies in the United States.
S&P 500 index funds are an excellent way to get diversified exposure to the heart of the U.S. stock market. They offer investors the opportunity to participate in the performance of some of the biggest and most successful companies in the country. FNILX and QQQM are often described as some of the best index funds for beginner investors. But are they the cheapest?
FXAIX, SWPPX: 2 S&P 500 Index Funds with More Room for Upside, According to Analysts · Fidelity 500 Index Fund (FXAIX). The FXAIX fund invests at least 80% of its assets in stocks included in the S&P 500 Index, aiming to closely track the index's performance. On the other hand, the Schwab S&P 500 Index Fund (SWPPX) seeks to replicate the total return of the S&P 500 Index and has a similar investment strategy to FXAIX.
State Street U.S. Core Equity Fund (SSAQX) is a fund focused on long-term growth among large-cap companies. It aims to provide investors with exposure to companies that are expected to grow over the long term, making it a suitable option for those seeking capital appreciation.
New investors just starting out on their journey to grow their wealth may be intimidated by all the possibilities. With so many investment options available, it can be challenging to determine which ones are best suited to their financial goals and risk tolerance. However, S&P 500 index funds like FXAIX and SWPPX are often recommended for their simplicity and broad exposure to the U.S. stock market.
FXAIX has a 5-year annualized total return of 12.29% and it sits in the top third among its category peers. This impressive performance has attracted the attention of many investors looking for consistent returns over the long term. However, if you are looking for a shorter-term investment, it's important to consider other factors such as volatility and market conditions.
FXAIX might be slightly cheaper, but at these sorts of “near-free” expense ratios, the price really shouldn't make your decision. If you're looking for a low-cost way to invest in the S&P 500, both FXAIX and SWPPX offer competitive expense ratios that make them attractive options for cost-conscious investors.
In 2023, the performances of the most widely held U.S. stock funds came down to one key factor: exposure to growth stocks. As technology and innovation continue to drive the economy, growth stocks have outperformed value stocks in recent years, leading many investors to shift their focus towards companies with high growth potential. This trend has had a significant impact on the performance of index funds like FXAIX and SWPPX, which have benefited from their exposure to growth-oriented companies in the S&P 500 Index.
