Are you considering which Vanguard fund to invest in?SWTSX vs VTSAX is a common question for investors. Both funds are excellent choices, but there are some key differences between them that you should consider before making your decision. In this blog post, we’ll break down the pros and cons of each fund so that you can make the best choice for your individual investing needs. Let’s get started!
What are SWTSX and VTSAX, and what do they invest in?
There are two main types of investment vehicles: mutual funds and exchange-traded funds (ETFs). Both SWTSX and VTSAX are mutual funds. SWTSX is a U.S. small-cap stock fund, which means that it invests in the stocks of small companies. VTSAX, on the other hand, is a global stock market index fund, which invests in a basket of stocks that track the performance of a major stock index, such as the S&P 500. Both funds are managed by Vanguard, one of the largest asset managers in the world.
Other things being equal, small-cap stocks tend to be more volatile than large-cap stocks. This means that they have the potential for higher returns, but also come with higher risks. Over the long run, small-cap stocks have outperformed large-cap stocks. However, this out performance is not guaranteed, and there will be periods when large-cap stocks outperform small-caps. For example, during the dotcom boom of the late 1990s, large-cap tech stocks posted much higher returns than small-cap stocks.
VTSAX is a more diversified investment than SWTSX, since it invests in hundreds of different companies across multiple sectors. This diversification helps to reduce risk and makes VTSAX a more suitable investment for investors who are risk-averse. However, it also means that VTSAX is less likely to generate outsized returns in any given year. If you’re looking for potential for high returns, SWTSX may be a better choice than VTSAX. But if you’re looking for stability and lower risk, VTSAX may be a better option.
How have the two funds performed over the past year or so?
Over the past year, SWTSX has outperformed VTSAX by a significant margin. SWTSX is up 12.62%, while VTSAX is only up 9.45%. This difference is even more pronounced when you compare the two funds over a longer timeframe. SWTSX has an annualized return of 13.21% over the past 5 years, while VTSAX has an annualized return of only 11.22%.
This means that SWTSX has outperformed VTSAX by more than 2% per year on average over the past 5 years. This outperformance is largely due to SWTSX’s higher exposure to growth stocks. While both funds are diversified across a variety of industries, SWTSX has a significantly higher weighting in technology and healthcare stocks, which have been some of the best-performing sectors in recent years. For investors who are looking for growth, SWTSX is the clear choice.
Which fund is a better investment for you, based on your personal goals and risk tolerance levels?
There are a lot of factors to consider when choosing which investment fund is right for you. Two of the most important considerations are your personal goals and risk tolerance levels. SWTSX and VTSAX are two popular investment funds, but they have different strengths and weaknesses. SWTSX is better for short-term goals, because it has a higher potential for growth in the short term.
However, it is also more volatile, so it may not be the best choice for investors who are risk-averse. VTSAX, on the other hand, is less volatile and therefore may be a better choice for investors who are looking to invest for the long term. It’s important to think carefully about your personal goals and risk tolerance levels before making any decisions about which investment fund is right for you.
Are there any other factors you should consider when making your decision about which fund to invest in?”
When SWTSX was introduced in October 2011, it was hailed as a game-changer for index investors. Unlike traditional index funds, which seek to track an index by investing in the underlying stocks or bonds, SWTSX uses a “sampling” approach. Instead of holding all of the securities in an index, SWTSX buys a representative sample. This strategy can lead to lower costs and greater flexibility for investors.
However, there are some downsides to this approach. SWTSX is more difficult to trade than traditional index funds, and it may be less tax-efficient. Additionally, the fund has a higher expense ratio than VTSAX, which is one of the leading traditional index funds.
Ultimately, the decision of which fund to invest in depends on your individual circumstances. Consider your goals, risk tolerance, and time horizon when making your decision. If you are looking for low costs and simplicity, VTSAX may be the better choice. However, if you are willing to accept more risk in exchange for potential rewards, SWTSX could be a good option.