VTI, VTSAX, SCHB, SPX, IVV - what's the diff?!

[Aardvark]

All of these track near identical paths over the past 20 years.
Is there anything other than the Total Expense Ratio that might make one better than the other for long term investing?

My understanding is that if you're a day trader the difference between VTI and VTSAX is significant, but that if you're expecting to hold for many years then all of these things are basically identical.

I'm sure there are differences, otherwise there wouldn't be so many options. But my question is whether I should care about any of these differences?

Please educate me! :)

[secondcor521]

Well, they're three different things provided by four different institutions, and they track three different indices.

VTI is an ETF provided by Vanguard and tracks a total market index.

VTSAX is a mutual fund provided by Vanguard and tracks the same total market index.

SCHB is an ETF provided by Schwab and tracks a "Broad Market Index".

SPX is an index provided by S&P and tracks the S&P 500.

IVV is an ETF provided by Blackrock and tracks the S&P 500.

Whether ETF or mutual fund matters to you is one thing.  You can research the differences if you like.  Since I don't day trade and most of my money is tax deferred, I don't think it matters much for me.

Whether the company managing the product matters is another thing (and this is where expense ratio comes into play).  Vanguard, Schwab, and Blackrock are all well respected generally, and the expense ratios of these are nearly identical.

The index it tracks probably matters the most if you ask me.  But since all of the indices above include hundreds to thousands of companies and are all US-based and are all capitalization weighted, they are going to track each other very closely over time.  I favor broader indices, which is why I personally invest in VTI and VTSAX.

You might learn about tracking error and how that relates to investment performance and expense ratios.  Although unless you're talking about $10M or more, this is also a very minor issue in the big scheme of things.

You can also, FWIW, probably purchase any combination of ETF, index, and investment company you like.  For example, if you like VTI because it is a Vanguard ETF but want to invest in the S&P 500 instead of the total market index, then you could buy VOO.  If you want a mutual fund structure at Vanguard for the S&P 500, then you'd buy VFIAX.  And so forth.

[Aardvark]

Thanks for the thorough reply.

I think I know WAY less than you about this stuff, and realistically, I don't see myself spending much time on understanding the nuances. It seems as though what you're saying points me in the same direction that I was already in. At the end of the day - for me, at WAY less that $10M - these can all be treated as the same thing and I don't need to sweat it worrying about which one is the "best" or even the "right" one for me...

I'd be surprised if you disagree with me on that...?

[secondcor521]

Thanks for the thorough reply.

I think I know WAY less than you about this stuff, and realistically, I don't see myself spending much time on understanding the nuances. It seems as though what you're saying points me in the same direction that I was already in. At the end of the day - for me, at WAY less that $10M - these can all be treated as the same thing and I don't need to sweat it worrying about which one is the "best" or even the "right" one for me...

I'd be surprised if you disagree with me on that...?

Dollar-wise, I agree with you.

Philosophically, I think everyone should understand their finances well enough to make a plan and decisions in which they are confident.  That level varies from person to person; I'm probably on the higher end due to my personality.  I also just have an interest in the topic, as many here do.

Practically, you can't buy SPX because it isn't a product; it's the index itself and is therefore just some calculations.  But things like VOO and IVV are very nearly the same thing, and you can buy those if that's what you decide.

Finally, if you make good decisions with the "way less than $10M", work hard, and are fortunate to have good luck and good health, you may end up with $10M.  Compounding can sneak up on people.

[PDXTabs]

SCHB is an ETF provided by Schwab and tracks a "Broad Market Index".

FWIW I think that SCHB tracks DW25.

[MustacheAndaHalf]

All of these track near identical paths over the past 20 years.

SCHB did not exist 20 years ago.
VTI and VTSAX are identical - they are different share classes of the same fund.
IVV and SPX hold identical assets - both track the S&P 500 index.

VTSAX gained +405% over 22 years
IVV gained +374% over 22 years
(both from Portfolio Visualizer)

Both have the same expense ratio of 0.03%, which subtracts less than 1% from performance.  What I see is a total stock market fund beating an ETF that limits itself to the S&P 500.  So I'd favor a total market fund (VTSAX) or ETF (VTI).

Consider Tesla, which the S&P 500 avoided adding for a very long time - it didn't meet their criteria.  Total stock market funds bought Tesla long before that, which helped include more of Tesla's returns.

[jinga nation]

Thanks for the thorough reply.

I think I know WAY less than you about this stuff, and realistically, I don't see myself spending much time on understanding the nuances. It seems as though what you're saying points me in the same direction that I was already in. At the end of the day - for me, at WAY less that $10M - these can all be treated as the same thing and I don't need to sweat it worrying about which one is the "best" or even the "right" one for me...

I'd be surprised if you disagree with me on that...?

Dollar-wise, I agree with you.

Philosophically, I think everyone should understand their finances well enough to make a plan and decisions in which they are confident. That level varies from person to person; I'm probably on the higher end due to my personality.  I also just have an interest in the topic, as many here do.

Practically, you can't buy SPX because it isn't a product; it's the index itself and is therefore just some calculations.  But things like VOO and IVV are very nearly the same thing, and you can buy those if that's what you decide.

Finally, if you make good decisions with the "way less than $10M", work hard, and are fortunate to have good luck and good health, you may end up with $10M.  Compounding can sneak up on people.

Please read https://www.bogleheads.org/wiki/Stock_market_indexing - this is per the bolded above.

@Aardvark the fact that you've asked an important Q means you are ready for this info. :-p

[Aardvark]

Okay - You've convinced me. I will read @jinga nation's suggestion over the weekend. Thanks for the nudge.

...BUT... Reading this goes somewhat against my view of mustachianism - which is basically, "do the right thing, don't sweat the small stuff". I'm going to use this as a litmus test, but at the moment I don't think I really care about the difference between these tickers - it just seems to nuanced to be of major importance to me and my portfolio. But maybe I'm wrong about that :)

[jinga nation]

Okay - You've convinced me. I will read @jinga nation's suggestion over the weekend. Thanks for the nudge.

...BUT... Reading this goes somewhat against my view of mustachianism - which is basically, "do the right thing, don't sweat the small stuff". I'm going to use this as a litmus test, but at the moment I don't think I really care about the difference between these tickers - it just seems to nuanced to be of major importance to me and my portfolio. But maybe I'm wrong about that :)

I don't know how reading this goes against Mustachianism i.e. read less.
Mustachianism is about educating yourself (and that includes reading more than usual) to embiggen your knowledge center, to make a fact-based / data-driven / logical decision.

[Aardvark]

I read a lot. Reading this means that I will not be reading something else. I think Mustachiansim is about being smart about what you read and what you don't read. This has been on my "not worth reading" list for a while, but as I said, I am changing that and plan to read this over the weekend.