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Spartan Funds vs. Vanguard
Old 05-27-2014, 02:25 PM   #1
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Spartan Funds vs. Vanguard

After doing some research and planning the past few months I have decided that I would ultimately like to move my money to index funds (currently I am using Vanguard ETFs through TD Ameritrade). In my opinion it seems index funds are simpler and I don't have to worry about things like the bid ask spread in terms of cost.

I am not against using Vanguard, but I am leaning towards Fidelity for a few reasons:

1) I would like to have all my money in one place and I like their banking, calculators, and web site much better.
2) I have regularly had problems with Vanguard's website to the point where it makes it hard to view my investments. I am working with them on a solution but it seems to be a recurring problem which makes me wary of using them for investing. I don't want to constantly be dealing with website issues.

It would seem that Fidelity's Spartan funds are comparable to Vanguard's funds in terms of expense and performance. However, I am slightly scared away by this article:

Fidelity vs. Vanguard: Which is best? - MarketWatch

Merriman's cites the following:

Quote:
For the 10 years ended Dec. 31, 2012, my moderate (60% equity) portfolio at Fidelity returned 7.8%; in that same period my moderate Vanguard portfolio returned 9.1%. The difference might not seem very important. But it is.
I realize Spartan funds are relatively new so there may not be a reliable period to compare Vanguard to Fidelity, but this just struck me. Later in the article Merriman cites the cost of Fidelity's funds as the difference between performance......to me with Spartan funds, that seems irrelevant. Am I missing something?

Ultimately I just want a few funds for my portfolio:

Total Stock Market index
US Small Cap
REIT
International Index
Emerging Markets
Total Bond Market

Is there any reason that I couldn't rely on Spartan funds to construct a comparable portfolio to Vanguard funds? I would hate to give up the extra return at the risk of costs. I realize that the Spartan funds track slightly different indexes than Vanguard, and I am okay with that....I am mostly concerned that there is something I am missing from Merriman's article.

So really it comes down to this:

Am I missing something, or reading way too much into Merriman's comment? To me it looks like Spartan funds (at least for now) are comparable to Vanguard.
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Old 05-27-2014, 02:50 PM   #2
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Quote:
Originally Posted by Klubbie View Post
I realize Spartan funds are relatively new so there may not be a reliable period to compare Vanguard to Fidelity, but this just struck me. Later in the article Merriman cites the cost of Fidelity's funds as the difference between performance......to me with Spartan funds, that seems irrelevant. Am I missing something?
The article never explicitly describes Merriman's Fidelity portfolio but if you look at his website he lists a bunch of Spartan and non-Spartan funds in his recommendations. The non- spartan funds can have very high expense ratios (e.g. 1% for small cap value) and is probably the cause of the difference.

I generally prefer Vanguard index funds/etfs but I wouldn't hesitate to use the Spartan mutual funds for money already at Fidelity. I also use some iShares ETFs which are higher E.R than vanguard but not as high as some of the Fidelity mutual funds.

Quote:
Ultimately I just want a few funds for my portfolio:

Total Stock Market index
US Small Cap
REIT
International Index
Emerging Markets
Total Bond Market

Is there any reason that I couldn't rely on Spartan funds to construct a comparable portfolio to Vanguard funds? I would hate to give up the extra return at the risk of costs. I realize that the Spartan funds track slightly different indexes than Vanguard, and I am okay with that....I am mostly concerned that there is something I am missing from Merriman's article.
If you can find Spartan index funds with low expense ratios, I think that would be a fine alternative to vanguard.
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Old 05-27-2014, 03:05 PM   #3
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Six of one, half a dozen of another.

I own both vtsax and fstmx because our main investment account is with Vanguard, but my largest IRA is with Fidelity. I like having assets in a couple of different companies.

The Spartan funds have very low expense ratios:

0.06% FSTVX - Spartan Total Market Index Fund - Fidelity Advantage Class
0.1% FSTMX - Spartan Total Market Index Fund - Investor Class
0.05% VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares
0.17% VTSMX - Vanguard Total Stock Market Index Fund Investor Shares

All are very low. Vanguard is rock bottom for Admiral shares, but not quite as good for investor shares (the Advantage/Admiral shares require a larger minimum balance).

(Schwab also has similar funds FWIW)
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Old 05-27-2014, 04:20 PM   #4
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Quote:
Originally Posted by Klubbie View Post
Am I missing something, or reading way too much into Merriman's comment? To me it looks like Spartan funds (at least for now) are comparable to Vanguard.
Nope, you've got it right. I own mostly Vanguard funds, but have some Fidelity Spartan funds in my SOLO 401K. The Spartan funds have very low expenses, even lower than many Vanguard index funds. Before you invest in any fund, do be sure to verify that the low ERs aren't the result of a temporary "subsidy" by the parent company that will eventually expire (IIRC some of my Spartan funds were like that, but the "permanent" ER was still plenty low).
The "universe" of Spartan funds isn't very broad, but if they've got what you need the costs can be very low.
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Old 05-27-2014, 05:15 PM   #5
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When it's time to rollover my 401k at Fidelity I plan to switch from my companies selection of Vanguard Instl share funds to Spartan Advantage class - TSM TISM and TBM funds. We still hold DW's rollover IRA and our Roths at Vanguard, Both are fine in my eyes. Vanguard a very slight edge in cost and Fidelity an edge in service, based on my experiences which are few and far between.
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Old 05-28-2014, 07:44 AM   #6
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Both are fine in my eyes. Vanguard a very slight edge in cost and Fidelity an edge in service, based on my experiences
Ditto.
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