Vanguard versus Fidelity: Multidimensional Comparison of the Index Funds and ETFs of the Two Largest Mutual Fund Families

15 Pages Posted: 8 Apr 2019

See all articles by Chong Li

Chong Li

Duke University, Trinity College of Arts & Sciences, Department of Economics; Sichuan University

Edward Tower

Duke University - Department of Economics; Chulalongkorn University-Economics Department

Rhona Zhang

North Carolina School of Science and Mathematics, Students

Date Written: March 26, 2019

Abstract

This paper compares Vanguard and Fidelity on 21 comparable funds in five aspects: performance, tax-efficiency, cost, diversification, benchmark and tracking precision. The conclusions are as follows: first, for pre-tax return, the difference between Vanguard and Fidelity is small, but Vanguard is the clear winner in after-tax return; second, Vanguard is much more tax-efficient than Fidelity; third, for the cost, Fidelity has lower expense ratio than Vanguard in all sample funds, while Vanguard has lower turnover, and both Vanguard and Fidelity have their own short-term redemption fee policy; fourth, Vanguard funds are more diversified which should reduce uncompensated risk; fifth, Fidelity funds have higher tracking precision to their benchmarks than Vanguard funds, but the difference is very small.

Keywords: Vanguard; Fidelity; Comparison

Suggested Citation

Li, Chong and Tower, Edward and Zhang, Rhona, Vanguard versus Fidelity: Multidimensional Comparison of the Index Funds and ETFs of the Two Largest Mutual Fund Families (March 26, 2019). Economic Research Initiatives at Duke (ERID) Working Paper No. 283 (2019). Available at SSRN: https://ssrn.com/abstract=3361263 or http://dx.doi.org/10.2139/ssrn.3361263

Chong Li

Duke University, Trinity College of Arts & Sciences, Department of Economics ( email )

Durham, NC
United States

Sichuan University

No.24 South Section 1, Yihuan Road
School of Economics
Chengdu, Sichuan 610065
China

Edward Tower (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1818 (Phone)
919-684-8974 (Fax)

Chulalongkorn University-Economics Department

Bangkok
Thailand

Rhona Zhang

North Carolina School of Science and Mathematics, Students ( email )

Durham, NC
United States

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