Vanguard Total Stock Market Index Fund vs. Vanguard 500 Index Fund: An Overview
Two of Vanguard’s most popular products are the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard 500 Index Fund Admiral Shares (VFIAX). Both can serve as suitable core holdings in a stock portfolio, but these two mutual funds pursue different investment strategies.
As its name implies, the Total Stock Market Index Fund is highly diversified, investing in stocks across the entire U.S. equities market, using as a benchmark the Center for Research in Security Prices (CRSP) U.S. Total Market Index of nearly 4,000 stocks.
The 500 Index Fund invests in the largest U.S. companies, similar to the list that makes up the S&P 500 Index. That gives the investor a stake in the biggest players in all of the major U.S. sectors.
Key Takeaways
- Both the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard 500 Index Fund Admiral Shares (VFIAX) are broad-based stock mutual funds.
- The Vanguard Total Stock Market Index Fund invests in the entire U.S. equities market, consisting of thousands of publicly traded companies of all sizes.
- The Vanguard 500 Index Fund invests solely in the 500 largest U.S. firms that comprise the S&P 500 Index.
About 'Admiral' Funds
The Vanguard Total Stock Market Index Fund and the Vanguard 500 Index Fund are available to new investors only through Vanguard's Admiral shares. Their classes of Investor shares are now closed to new investors. The only difference is the minimum required investment for the funds.
Vanguard Total Stock Market Index Fund (VTSAX)
The Vanguard Total Stock Market Index Fund (VTSAX) is based on a total market index that tracks the prices of about 4,000 American companies across all major industry sectors.
It's a wide-ranging group with built-in diversity, as it includes small-cap, midcap, and large-cap stocks as well as growth and value stocks that are traded on the Nasdaq and New York Stock Exchange (NYSE).
The fund managers employ a representative sampling approach to approximate the entire index and its key characteristics. Technology, industrials, financial, healthcare, and consumer discretionary companies make up its largest holdings.
In fact, its top holdings as of January 2025 were all technology stocks: Apple Inc., Microsoft Corp., NVIDIA Corp., and Amazon.com Inc.
As of January 2025, the fund held 3,609 stocks and controlled net assets of .8 trillion.
VTSAX charges an extremely low expense ratio of 0.04% and requires a minimum investment of ,000.
Top 10 Holdings
The top 10 holdings of VTSAX are as of year-end 2024:
VTSAX Top 10 Holdings
HoldingsShares (in millions)
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Apple Inc.
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118.7
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Microsoft Corp.
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98.2
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NVIDIA Corp.
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97.9
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Amazon.com Inc.
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65.0
|
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Facebook Inc. Class A
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40.0
|
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Alphabet Inc. Class A
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34.7
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Tesla Inc.
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34.5
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Broadcom Inc.
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34.0
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Alphabet Inc. Class C
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28.0
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Berskhire Hathaway Inc. Class B
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25.1
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Important
The Vanguard Total Stock Market Index and the Vanguard 500 Index mutual funds are also available as exchange-traded funds (ETFs).
Vanguard 500 Index Fund (VFIAX)
The Vanguard 500 Index Fund (VFIAX)—the first index fund for individual investors, according to the company—provides exposure to a subset of the entire U.S. equity market: the Standard & Poor’s 500 (S&P 500) Index, whose component companies are the 500 largest U.S. companies and account for about three-fourths of the value of the entire stock market.
The Vanguard 500 Index Fund seeks to replicate its benchmark index by investing its assets in the stocks comprising the index and holding each component with approximately the same weight as the index. In this way, the fund barely deviates from the S&P 500, which it is designed to mimic.
As of Jan. 18, 2025, the Vanguard 500 Index Fund had .4 trillion in total net assets and, despite its name, holds 500 stocks.
Like its sister fund, VTSAX charges an expense ratio of 0.04% and requires a minimum investment of ,000.
Top 10 Holdings
The top 10 holdings of VFIAX are (as of end of year 2024):
VFIAX Top 10 Holdings
HoldingsShares (in millions)
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Apple Inc.
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409.4
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NVIDIA Corp.
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664.3
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Microsoft Corp.
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201.3
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Amazon.com Inc.
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253.4
|
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Facebook Inc. Class A
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59.0
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Tesla Inc.
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75.6
|
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Alphabet Inc. Class A
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158.2
|
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Broadcom Inc.
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126.5
|
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Alphabet Inc. Class C
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128.9
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Berkshire Hathaway Inc. Class B
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49.6
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Key Differences
You'll notice that the lists of top 10 holdings in these two funds are very similar, although their portfolio weights differ. They diverge farther down the list, as the 500 Index Fund tracks only the biggest companies and the Total Stock Market Index ranges widely among companies of different sizes, profiles, and industries.
The Vanguard Total Stock Market Index Fund is best suited for moderately to highly risk-tolerant investors seeking low-cost exposure to the entire U.S. stock market. It could also function as a single domestic equity fund in a portfolio.
The Vanguard 500 Index Fund is suitable as a core equity holding for investors with a long-term investment horizon and a preference for the lower risk of the large-cap equity market. Since it concentrates on more conservative, large-cap stocks, the fund might work best in a diversified portfolio that also contains exposure to aggressive growth stocks.
In comparison to the Vanguard Total Stock Market Index Fund, the Vanguard 500 Index Fund has historically experienced slightly lower volatility and return. However, the Sharpe ratios (the most widely used method for calculating risk-adjusted return) are nearly identical, which indicates that investors in both funds had similar returns on a risk-adjusted basis.
What Is the Fidelity VTSAX Equivalent?
Fidelity offers a mutual fund that is broadly similar to Vanguard’s VTSAX: the Fidelity ZERO Total Market Index Fund (FZROX).
How Can I Invest in the VTSAX?
VTSAX can be purchased directly through Vanguard or via your broker’s mutual fund portal. There is also an ETF equivalent to VTSAX: the Vanguard Total Stock Market ETF (VTI) that can be purchased through any brokerage.
What Are VTSAX ETF Equivalents?
There are a number of broad-market ETFs, including Schwab’s U.S. Broad Market ETF (SCHB) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT).
The Bottom Line
The Vanguard Total Stock Market Index Fund and the Vanguard 500 Index Fund are superficially similar, especially when you take a look at the top selections in their holdings. But they are very different animals.
The Total Stock Market Index fund gives you a stake in companies of all sizes and in ever major sector of the U.S. economy. That makes it, by nature, a little more aggressive and a little riskier.
The Vanguard 500 Index Fund gives you a stake in America's current biggest and best companies, the components of the S&P 500.