Comparing total stock market index funds can be like trying to distinguish between snowflakes. You’ve been told they are all unique, but they sure do look a lot alike. Ultimately, the most important factor is fees: The lower the fees, the higher the returns, at least for the most part. But above and beyond fees, there are several factors we considered in making our selections.
We considered how each fund sought to mirror the total stock market in the U.S. We excluded those funds that didn’t track the majority of U.S. equities, such as S&P 500 index funds. While the performance of these funds is highly correlated with total market funds, they exclude small and mid-cap stocks. As such, they can’t fairly be described as total market funds.
With one exception, the funds in our list track the Russell 3000 Index, the Dow Jones U.S. Total Market Index or the CRSP US Total Market Index. In our view, each of these is a reasonable approach to capturing the U.S. equities market.
We also included Fidelity’s ZERO fund, which uses a proprietary Fidelity index. It’s the first fund we’ve found that doesn’t charge an expense ratio. Whether it will outperform the other funds in our list over the long-term is still unknown given is short tenure.
Finally, we considered a fund’s minimum investment and most recent 12-month yield. While there was some variance among the funds that made our list, they all fell within a narrow range.