SWTSX vs VTSAX: Which Has a Better Return?

Vanguard and Charles Schwab are two of the most prominent players for individual investors like you and me. Vanguards mutual funds and ETFs are some of the most popular funds. In fact, Vanguard is the largest asset manager out there.

Investing with Vanguard isn’t a bad idea, but that doesn’t mean you shouldn’t research what other options you have. Remember that diversification is an essential principle of investing. So it’s not a bad idea to have your investments in two different, albeit very similar, funds.

Here I will compare SWTSX vs VTSAX. These are two comparable funds. However, SWTSX is a fund created by Schwab, while VTSAX is one of Vanguards’ more popular funds.

SWTSX VS VTSAX: Publishers

Before we get into the facts about each fund, let’s learn about the issuers behind it, right?

As noted earlier, Vanguard is the largest asset manager in terms of assets held. Vanguard oversees the investment of more than $1.3 trillion in assets. Yes, that’s trillion, with a “T.” Pretty impressive if you ask me. As you might have guessed, their funds tend to be some of the most popular due to their low cost and high quality.

Charles Schwab has been helping investors achieve their financial goals since 1971. So they are definitely not a new player in the game. They oversee more than $300 billion worth of investor assets related to investment. Not quite in the same league as Vanguard, but nothing to sneeze at either. Schwab also has a wide range of quality funds and products, but tends to be more focused on investing in pensions.

SWTSX VS VTSAX: Underlying Index Tracked

VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares) is not technically an index fund, but for the most part it behaves like one. First issued in 1992, VTSAX includes large-cap, mid-cap and small-cap companies. However, because all caps are recorded and the fund is not actively managed, it behaves more like an index fund tracking the entire stock market as a whole.

SWTSX (Schwab Total Stock Market Index Fund) is a true index fund that tracks the Dow Jones US Total Stock Market Index. SWTSX also includes stocks ranging from small cap to large cap to capture the market as a whole.

In terms of structure and index for SWTX vs VTSAX, they are essentially the same fund.

SWTSX VS VTSAX: Expense Ratios

If you are not sure what an expense ratio is, allow me to clarify. An expense ratio is the fee you pay when you invest in a mutual fund or ETF. These are usually costs that the fund incurs to be actively managed. Expense allowances typically go toward paying salaries, rent, and other business expenses necessary to actively manage a fund.

Both expense ratios are very similar when it comes to SWTSX vs VTSAX. While VTSAX is technically a mutual fund, it is not actively managed, so the associated fee reflects that. At a meager 0.04%, it is one of the lowest fees out there for a mutual fund, typically in the 0.75% range.

So how does STWSX stack up? Well, since it’s actually an index fund, the expense ratio comes in slightly lower at 0.03%. Obviously a 0.01% difference won’t make a huge difference in your decision in SWTSX vs VTSAX, but it’s still good to know.

SWTSX VS VTSAX: Minimum Initial Investments

Another factor that comes into play in determining the right fund to invest your money in may be the minimum investment. Again, the term is as simple as it gets as this is the minimum you can invest in a fund. The only aspect to note is that this is just the initial investment. Once you’ve invested in a fund, you can usually buy more stocks with as little or as much as you want to invest at the time.

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When it comes to SWTSX vs VTSAX, SWTSX has a significant advantage. Since VTSAX is a mutual fund, it typically has a higher cost per investor. This cost is why VTSAX has an initial minimum investment of $3,000. Let’s say you choose to invest with VTSAX after the initial investment of 3k. In that case, you can invest with as little as $1 for subsequent investments.

SWTSX is an index fund with negligible cost per investor. The initial minimum investment is the price of one share at a time. Obviously, depending on when you’re reading this, that amount may vary. Still, it will undoubtedly be much lower than the minimum for VTSAX.

SWTSX VS VTSAX: Net Assets and Holdings

The number of assets in any of these mutual funds will not matter much to us individual investors. Both can be traded easily on any given day, so you should never have a problem buying or selling stocks when you want to.

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As you would expect, due to the size of the issuers, VTSAX has a significant advantage over SWTSX. VTSAX currently has 321 billion in assets, while STSAX owns approximately 17.6 billion. But again, asset size doesn’t change much for individual investors, other than showing how many others were willing to invest in both.

As for owning SWTSX vs VTSAX, VTSAX has a slightly bigger advantage. VTSAX owns over 3,600 different individual stocks, while SWTSX owns just over 3,000 stocks. This means that VTSAX will follow the general trends of the overall stock market as a whole and may be less volatile than SWTSX.

Both funds also have the same top 10 positions, with only slight variations in how much of their total assets are in each fund:

SWTSX Top Positions:

CompanySymbolTotal Net AssetsApple IncAAPL5.59%Microsof Corp.MSFT5.10%Amazon.com IncAMZN2.94%Alphabet Inc. Cl AGOOGL1.76%Tesla Inc.TSLA1.74%Alphabet Inc.Cl CGOOG1.63%Meta Platforms Inc.FB1. 61%NVIDIA Corp.NVDA1.49%Berkshir Hathaway Inc. Cl BBRK.B1.1%UnitedHealth Group IncUNH0.96%

Top positions of VTSAX:

CompanySymbolTotal Net AssetsApple IncAAPL5.71%Microsof Corp.MSFT5.21%Amazon.com IncAMZN2.97%Alphabet Inc. Cl AGOOGL1.80%Tesla Inc.TSLA1.75%Meta Platforms Inc.FB1.64%Alphabet Inc. Cl C. GOOG1.61%NVIDIA Corp.NVDA1.44%Berkshir Hathaway Inc. Cl BBRK.B1.05%UnitedHealth Group IncUNH0.98%

SWTSX VS VTSAX: Compositions

As mentioned, both SWTSX and VTSAX hold small-cap, mid-cap, and large-cap funds. As with the top 10 positions above, the distribution of each of the cap types within both funds is very similar.

Currently, the composition for VTSAX looks like this:

Small-Cap – 6.4% of total holdings

Mid Cap – 17.5% of total holdings

Large Cap – 76.2% of total holdings

And the current composition for SWTSX looks like this:

Small-Cap – 6.3% of total holdings

Mid Cap – 17.5% of total holdings

Large Cap – 76.2% of total holdings

As with any fund, rebalancing is performed periodically. However, since none of these funds are actively managed, the compositions for each will not change much. The only difference you see above is that the large-cap and small-cap numbers are slightly different. This is likely due to the difference in the total number of shares of each fund (3000 vs 3600).

SWTSX VS VTSAX: Sector Allocations

Perhaps not so much in this case, but when selecting a fund to invest in, it is generally a good idea to know which sectors that fund invests in. for whatever reason, you may want to avoid that fund. Since these funds aim to track the entire market, their sector exposures are comparable.

Sector Allocations SWTSX: Sector Allocations VTSAX:

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As you can see they are both very similar in which sectors each fund is exposed to and how much exposure they have in each sector. Not surprisingly, technology is the top sector for both, followed by finance. Each of those sectors has some heavy hitters in the Dow Jones Industrial Average, so it makes sense that these would be the top two sectors.

SWTSX VS VTSAX: Overall Performance

It should come as no surprise that the overall performance of each of these funds is also nearly identical. Since they both have similar compositions, ranks and positions, the overall performance reflects that.

SWTSX Overall performance: VTSAX Overall performance:

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Again, the small difference in performance is likely due to those approximately 600 additional small-cap positions in the VTSAX vs. SWTSX. Investing in either one would give you very similar capital gains.

SWTSX vs VTSAX: Which is Better?

Choosing which of these funds is better is basically splitting hairs at this point. The VTSAX has slightly better performance figures, but if you remember, SWTSX has a slightly lower expense ratio. So in both cases we are probably talking about a small difference in total return.

The fact is that both funds are great investments with returns of over 14% over a long term investment period of 10 years. The trick is that you have to start investing in the first place! Really, you can go wrong here; both are very solid investments.

SWTSX VS VTSAX: Final Thoughts

Historically, there is not much difference when it comes to SWTSX vs VTSAX. Almost identical in every aspect, starting with their expense ratios to their holdings, sector exposure and finally their overall performance. Both are low-cost funds with little to no management fees. The only real difference is how much assets under management for each fund, but that should hardly change your decision. Either would be an excellent investment. Many investors will have money in both.

Jeff Cooper

Jeff is a fan of all things finance. When he’s not changing the world with his blog, you can find him on a run, playing a Mets game, playing video games, or just playing with his kids.

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