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Index Fund picking - Total Market or 500?
Old 04-18-2020, 10:14 AM   #1
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Index Fund picking - Total Market or 500?

Trying to reorganize and simplify our portfolio. We have money in both Fido Total Market and 500 index funds, among others. They seem to be quite similar. I think I should consolidate these two, but into which?


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Old 04-18-2020, 10:20 AM   #2
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S&P 500 funds hold about 15% of US listed stocks, but that small slice comprises about 80% of the US market cap. So those who advocate them argue correctly that they are "almost" total market funds.

I see no reason to go with "almost" when I can buy the whole market so easily.

There are also concerns that the 500 market cap is dominated by just a few stocks, which is true. Also that it is "overvalued" (whatever that means) because so many people are buying S&P 500 funds. Since we have never owned such a fund these are not things I've worried much about.

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Old 04-18-2020, 10:29 AM   #3
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While my good friend OldShooter makes some good points and I also prefer Total Stock to 500 because it covers more of domestic US stocks, the reality is that the returns are similar enough that in the long-run it doesn't matter very much. The accumulated value from Jan 1993 to March 2020 was only 2% different... with 500 outperforming Total Stock by 0.08% annually.
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