FXAIX vs VOO: Which S&P 500 Index Fund Is Best for 2026?

Looking to invest in the S&P 500 but not sure whether to choose Fidelity's FXAIX mutual fund or Vanguard's VOO ETF? Let's dive in!

FXAIX vs VOO: Which S&P 500 Index Fund Is Best for 2026?

This comprehensive comparison breaks down everything you need to know about these popular index funds to help you make the best decision for your investment portfolio in 2026.

Key Differences Between FXAIX and VOO

FXAIX (Fidelity 500 Index Fund) and VOO (Vanguard S&P 500 ETF) both track the S&P 500 index but differ in structure, accessibility, and certain features. Understanding these differences is crucial for making the right investment choice.

1. FXAIX (Fidelity 500 Index Fund)

FXAIX is Fidelity's flagship S&P 500 index fund that provides investors with exposure to 500 of the largest U.S. companies. As a mutual fund, it offers some distinct advantages for certain types of investors.

FXAIX Pros:

• Ultra-low expense ratio of 0.015% - One of the lowest in the industry
• No minimum investment requirement - Start with any dollar amount
• Fractional share investing - Invest exact dollar amounts
• Automatic investments - Easy to set up recurring contributions
• No commission fees when purchased directly through Fidelity

FXAIX Cons:

• Only trades once per day at market close
• Less tax-efficient than ETFs due to potential capital gains distributions
• Only available through Fidelity or certain brokerages

2. VOO (Vanguard S&P 500 ETF)

VOO is Vanguard's popular ETF that tracks the S&P 500 index. As an exchange-traded fund, it provides unique benefits, particularly for investors who value trading flexibility and tax efficiency.

VOO Pros:

• Trades throughout the day like a stock
• Superior tax efficiency due to in-kind redemption mechanism
• Available at most brokerages - Not limited to Vanguard accounts
• Options trading available for advanced strategies
• Slightly more transparent with daily published holdings

VOO Cons:

• Slightly higher expense ratio of 0.03% (still extremely low)
• Requires purchasing full shares at many brokerages
• May incur trading commissions at some brokerages
• Bid-ask spreads can be a factor in trading costs

Performance Comparison

When comparing the performance of FXAIX and VOO, both have nearly identical returns since they track the same index. Over the past 10 years (as of January 2026), both funds have delivered annualized returns of approximately 12.5%, with only minimal tracking differences.

The main performance difference comes from the slightly lower expense ratio of FXAIX (0.015% vs 0.03% for VOO), which gives FXAIX a theoretical edge of 0.015% annually. However, this difference is so minimal that other factors like tax efficiency and trading flexibility are likely more important for most investors.

Who Should Choose FXAIX?

FXAIX might be the better choice if you:

• Already have a Fidelity account and want to keep everything in one place
• Want to invest with small dollar amounts (under $500)
• Prefer to invest exact dollar amounts rather than share quantities
• Value automatic investments and dividend reinvestment
• Are investing in tax-advantaged accounts like 401(k)s or IRAs where tax efficiency is less important

Who Should Choose VOO?

VOO might be the better choice if you:

• Want the flexibility to trade throughout the day
• Are investing in a taxable account where tax efficiency matters more
• Prefer using a non-Fidelity brokerage
• Want to use options strategies with your S&P 500 investment
• Value greater transparency with daily published holdings

Tax Efficiency Considerations

One key difference between these funds is tax efficiency. VOO, as an ETF, has structural advantages that make it more tax-efficient in taxable accounts:

• ETFs can use "in-kind redemptions" to eliminate many capital gains distributions
• FXAIX, as a mutual fund, may distribute capital gains to shareholders even if you haven't sold shares
• For retirement accounts like IRAs or 401(k)s, this tax difference is largely irrelevant

If you're investing in a taxable account and plan to hold long-term, VOO's superior tax efficiency could save you money over time.

Investment Strategy Compatibility

Your personal investment strategy should influence which fund you choose:

• Dollar-cost averaging with small amounts: FXAIX may be more convenient due to no minimum investment
• Lump-sum investing: Either fund works well
• Active trading: VOO's intraday trading capability is advantageous
• Long-term buy-and-hold: Both are excellent, with VOO having a slight edge in taxable accounts

For new investors just starting out, FXAIX's ability to invest with any dollar amount makes it particularly accessible. As explained in our guide on what are index funds, this accessibility is a key advantage for beginners.

Platform Availability

Another important consideration is where you can buy these funds:

• FXAIX is primarily available through Fidelity's platform with no transaction fees
• Some other brokerages offer FXAIX but may charge transaction fees
• VOO is available at virtually all brokerages, often commission-free

If you already have a Fidelity account or plan to open one, FXAIX is very convenient. For those using other platforms, VOO is typically more accessible. For more on ETF investing fundamentals, check out our detailed guide on what is an ETF.

Retirement Account Considerations

In retirement accounts such as 401(k)s and IRAs:

• Tax efficiency differences become less important
• FXAIX's automatic investment features may be more valuable
• Many 401(k) plans offer Fidelity index funds but not ETFs

For most retirement accounts, FXAIX is often the more practical choice, especially if your plan already offers it as an option.

Similar Fund Alternatives

While FXAIX and VOO are excellent options, there are similar alternatives worth considering:

• VFIAX - Vanguard's S&P 500 mutual fund counterpart to VOO (0.04% expense ratio)
• IVV - iShares Core S&P 500 ETF (0.03% expense ratio)
• SPY - SPDR S&P 500 ETF Trust (0.09% expense ratio)
• FNILX - Fidelity ZERO Large Cap Index (0.00% expense ratio, tracks a slightly different index)

If you're interested in exploring more Vanguard ETF options, our comparison of VOO vs VOOG provides insights into how the standard S&P 500 ETF compares to its growth-focused counterpart.

Final Words

Both FXAIX and VOO are exceptional investment options for gaining exposure to the S&P 500 index. Your choice ultimately depends on your specific investment goals, account types, and personal preferences.

For most long-term investors, the differences between these funds are minimal enough that either would be an excellent choice. FXAIX offers a slightly lower expense ratio and easier fractional investing, while VOO provides greater trading flexibility and tax efficiency.

If you're looking to diversify your investments beyond just the S&P 500, consider using an investment tracking platform to monitor your portfolio's performance and allocation. Whatever you choose, both funds represent a low-cost way to own a piece of America's largest companies and build wealth over time.