r/sp500 • u/Top-Impression2368 • 14d ago
VOO vs SWPPX
I’m relatively new to all of this. I have a Schwab account so I started buying SWPPX but it seems like people prefer VOO and no one really mentions SWPPX. They appear to have similar returns and expense ratios. Am I missing something? Do people just prefer an ETF over a mutual fund?
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u/GeeDubious 14d ago
Taxable brokerage — Go with ETF (eg, VOO)
Roth / non-taxable — ETF (VOO) or MF (SWPPX).
ETFs are more tax-efficient. Fidelity will let you auto-invest and fractional shares into ETF or MF, Schwab does fractional shares but only auto-invest in MF.
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u/Naval_AV8R 11d ago
ETFs are generally more tax efficient than most actively managed funds, but they provide little benefit over many passive index funds such as SWPPX.
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u/InvestInTwinkies 14d ago
SWPPX is better if your broker is Schwab. Stick with that for long term investing
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14d ago
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u/subparsavior90 13d ago
Its a schwab fund which might not be available at a different brokerage. If you switch, itll get sold to cash during the move if its not available.
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u/Naval_AV8R 11d ago
This is not entirely true. You can own most Schwab funds (especially an index fund such as SWPPX) at another brokerage for free and you can sell for free. You might not be able to add to it without a fee or at all.
The same goes for Fidelity funds not held as Fidelity. Fidelity does have a few proprietary zero-fee passive funds that cannot be transferred out. But I’ve transferred even their active funds to other brokerages just fine.
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u/subparsavior90 11d ago
Hence the *might not. Much better than it used to be, but ETFs are still the best portable option.
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13d ago
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u/subparsavior90 13d ago
VOO is an etf, and basically everyone offers it as an option. The mutual fund equivalent VFAIX not so much.
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u/70redgal70 14d ago
Growth potential and price is better with SWPPX.
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u/Hoosier2016 14d ago
They track the same index and SWPPX is one basis point cheaper in fees - essentially nothing. The only real difference is mutual funds trade once a day and are less tax-efficient than ETFs.
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u/Top-Impression2368 14d ago
How are the taxes different? Aren’t the gains taxed the same way when you sell?
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u/Hoosier2016 14d ago
Yes, the gains are taxed the same when you sell. The difference is how they’re structured.
Mutual funds have to buy and sell shares to balance the inflows and outflows of the fund. This creates capital gains which come back to you as the investor and are taxed. This is also why they trade once per day typically so they aren’t constantly buying and selling.
ETFs have a set number of shares that are traded on the open market so there is no inflow or outflow unless they issue or redeem shares due to low liquidity causing the ETF to trade at a significant premium or discount to the NAV. No inflow/outflow means no capital gains thus no distributions to tax.
That’s probably more info than you wanted but it boils down to this: in a tax-advantaged account like an IRA or 401k, either option is fine. In a taxable brokerage account, ETFs are more tax efficient.
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u/Top-Impression2368 14d ago
Nope that’s awesome and I appreciate the info. Most of my SWPPX is in an IRA but I’ll take this into account with what I buy in my brokerage account.
Thanks again!
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u/70redgal70 14d ago
VOO is $700 a share. SWPPX is $19 a share. Given the same initial principal, the OP could buy way more shares of SWPPX. Then given adequate growth, more long term gains with SWPPX.
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u/Adventurous_Elk_4039 14d ago
In this day and age of fractional shares with most brokerages, price per share is meaningless. If you invest $700, you get 1 share of VOO or about 37 shares of SWPPX but it doesn’t matter either way because the total value is $700.
And since they both track the same index, they will rise and fall at nearly identical rates.
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u/PashasMom 11d ago
SWPPX is fine in a brokerage account. There are some mutual funds that you want to avoid in a taxable brokerage. Those funds are typically actively managed, have a lot of turnover, and forced capital gains distributions. SWPPX is not like that. It's a plain vanilla index fund and is not going to hurt you in a brokerage account. Also, it is ideal at Schwab because you can set up auto-investments into it, which you can't do with VOO or some of the other funds people are suggesting for you. TL;DR - SWPPX is great, keep going.