VOO has the reputation as the cheap, no-nonsense way to own the S&P 500. It costs 0.03% a year, a fraction of what an actively managed fund charges, and Vanguard built its whole identity on pricing like this. So it's a little jarring to learn that Fidelity's own S&P 500 fund, FXAIX, charges 0.015%, half of VOO's fee, for the same 500 companies in essentially the same weights.
The fee gap is real but small in dollar terms. The more useful comparison is everything else: how each fund trades, where it fits, and what "same index" does and doesn't mean when the wrapper is different.
Same Index, Different Wrapper
FXAIX and VOO both track the S&P 500. Same roughly 500 companies, same market-cap weighting, same top holdings in essentially the same proportions. If you own one, you own the same underlying business exposure as if you owned the other. The difference is structural, not in what each fund holds.
FXAIX is a mutual fund. It prices once per day, after the market closes, at its net asset value (NAV). Every order placed during the day, buy or sell, executes at that single end-of-day price. VOO is an ETF. It trades continuously during market hours like a stock, with a live, fluctuating price that can move up or down within a single trading day.
For a long-term S&P 500 holding, intraday price movement rarely matters. You're not trying to time an entry to the minute. The bigger practical differences are access and cost, covered next.
The Fee, and Why It's Not the Whole Story
| FXAIX | VOO | |
|---|---|---|
| Structure | Mutual fund | ETF |
| Expense ratio | 0.015% | 0.03% |
| Minimum investment | None | Cost of 1 share |
| Trades | Once daily, at NAV | Continuously, market hours |
| Buy anywhere? | Best at Fidelity | Any brokerage |
| Index | S&P 500 | S&P 500 |
On a $50,000 investment, the fee difference between 0.015% and 0.03% is about $7.50 a year. That compounds over decades, but it's a rounding error compared to the decision most investors actually face: FXAIX is a Fidelity product. Some other brokerages allow buying it, often with a transaction fee attached, because it's a competitor's proprietary fund. VOO, as an ETF, trades on the open market and is commission-free at essentially any US brokerage. For most people, "which account do I actually have" decides this before the expense ratio does.
Tax Efficiency: Close, Not Identical
ETFs have a structural tax advantage over mutual funds: the in-kind creation and redemption process lets an ETF hand off appreciated securities without triggering a taxable sale inside the fund, which helps ETFs avoid distributing capital gains to shareholders. Mutual funds generally don't have this mechanism available to them in the same way.
In practice, this matters less for a fund like FXAIX than it would for an actively traded strategy. S&P 500 index funds have very low turnover, since the underlying index itself only changes when companies are added or removed. Large S&P 500 index mutual funds, FXAIX included, have a strong track record of avoiding meaningful capital gains distributions. The theoretical edge goes to VOO's ETF structure; the real-world gap for a fund this passive is usually small.
The BFF Take
The instinct to assume "ETF means cheaper" doesn't hold here. Fidelity built FXAIX to be a loss-leader inside its own ecosystem, and it worked: 0.015% undercuts even VOO, the fund most people point to as the standard for a cheap index. That's worth knowing, because the fee conversation usually gets treated as settled once VOO shows up.
What actually decides this isn't the basis point gap. It's where your account already lives. Inside a Fidelity account, FXAIX is the more efficient default, no minimum, no transaction fee, marginally cheaper. Anywhere else, VOO does the identical job with none of the friction. Neither fund is the "wrong" choice; picking between them is really a question about which brokerage you're already using, not which fund is better.
FXAIX vs VOO
- Both track the S&P 500 and hold essentially the same 500 companies in the same weights.
- FXAIX charges 0.015%, half of VOO's 0.03%, and has no investment minimum.
- FXAIX is a mutual fund (prices once daily at NAV); VOO is an ETF (trades continuously during market hours).
- FXAIX is best held at Fidelity; other brokerages may charge a fee to buy it. VOO trades commission-free almost anywhere.
- ETFs have a structural tax edge via in-kind redemptions, but for a low-turnover index fund like this, the practical gap is small.
- The decision usually comes down to which brokerage you already use, not which fund is objectively better.
Common Questions
Is FXAIX the same as VOO?
They track the same index, the S&P 500, and hold the same roughly 500 companies in essentially the same proportions. They are not the same fund. FXAIX is a mutual fund that trades once a day at its end-of-day net asset value. VOO is an ETF that trades continuously throughout the day like a stock. FXAIX charges a 0.015% expense ratio; VOO charges 0.03%. The underlying holdings are nearly identical; the wrapper and trading mechanics differ.
Is FXAIX cheaper than VOO?
Yes, on the expense ratio. FXAIX charges 0.015% versus VOO's 0.03%, so FXAIX costs half as much annually. On a $50,000 investment, that is a difference of about $7.50 per year, which compounds over decades but is small in absolute terms either way. FXAIX also has no minimum investment. The larger practical differences are trading mechanics and where each fund is easily accessible, not the fee.
Can I buy FXAIX outside of Fidelity?
Sometimes, but it depends on the brokerage, and many charge a transaction fee to buy a competitor's proprietary mutual fund. VOO, as an ETF, trades on the open market and can be bought commission-free at essentially any US brokerage. This accessibility difference is often the deciding factor: FXAIX makes the most sense specifically inside a Fidelity account, while VOO works the same everywhere.
Which is more tax-efficient, FXAIX or VOO?
Both are highly tax-efficient in a taxable account because S&P 500 index funds have very low turnover. ETFs like VOO have a structural advantage: the in-kind creation and redemption process lets them avoid realizing capital gains in ways mutual funds generally cannot. In practice, large S&P 500 index mutual funds like FXAIX also have strong records of avoiding capital gains distributions, so the real-world gap between the two is usually small. This is general education, not personalized tax advice.