Fidelity vs Vanguard: The Ultimate Index Fund Showdown
The two titans of low-cost investing. Both are legendary. Both will serve you well. But one might fit you better than the other.
⚡ Quick Verdict
- • You want the better mobile app
- • 24/7 customer service matters
- • You want fractional shares of any stock
- • Active trading alongside index investing
- • You're purely passive (set-and-forget)
- • You want admiral shares at $3K
- • Client-owned structure appeals to you
- • You don't need a fancy app
| Feature | Fidelity | Vanguard | Winner |
|---|---|---|---|
| Stock/ETF Trades | $0 | $0 | Tie |
| Payment for Order Flow | No | No | Tie |
| S&P 500 ETF Expense Ratio | 0.015% (FXAIX) | 0.03% (VOO) | Fidelity |
| Total Market ETF Expense | 0.015% (FSKAX) | 0.03% (VTI) | Fidelity |
| Zero Expense Ratio Funds | Yes (4 funds) ✓ | No | Fidelity |
| Fractional Shares | 7,000+ stocks ✓ | ETFs only (recent) | Fidelity |
| Mobile App (iOS) | 4.8 stars | 3.8 stars | Fidelity |
| Customer Service | 24/7 | Weekdays only | Fidelity |
| Admiral Shares (lower fees) | N/A (one tier) | $3,000 minimum | Vanguard |
| Company Ownership | Private (Johnson family) | Client-owned ✓ | Vanguard |
| AUM | $4.5 trillion | $9.3 trillion | Tie |
The Philosophy: Fidelity vs Bogle's Legacy
Vanguard was founded by John Bogle, the inventor of the index fund. The company is structured as a mutual—owned by its fund shareholders. This means Vanguard's only incentive is to lower costs for investors, not maximize profit for external owners.
Fidelity is privately owned by the Johnson family. They're still fiercely competitive on costs (their Zero funds prove it), but the ownership structure is fundamentally different. Some investors prefer Vanguard's alignment on principle.
Practically speaking? Both offer rock-bottom costs. The difference in expense ratios between FXAIX (0.015%) and VOO (0.03%) is $1.50 per year on a $10,000 investment. Choose based on other factors.
The App Gap: Fidelity Dominates
Vanguard's mobile app is notoriously clunky. With a 3.8-star rating on iOS, it's the worst-rated major brokerage app. Fidelity's 4.8 stars reflect a modern, intuitive experience.
If you check your investments regularly on your phone, Fidelity will be far more pleasant. If you truly set-and-forget once a year, Vanguard's app limitations won't matter.
Zero Expense Ratio Funds: Fidelity's Power Move
In 2018, Fidelity launched funds with literally 0% expense ratios:
- FZROX (Total Market)
- FZILX (International)
- FNILX (Large Cap - S&P 500 tracking)
- FZIPX (Extended Market)
These are loss leaders—Fidelity makes no money on them directly. But they're genuine value for investors. Vanguard has not matched this.
Customer Service: No Contest
Fidelity offers 24/7 phone support with knowledgeable representatives. Vanguard's service is weekdays only and reviews are mixed. For complex retirement questions or urgent issues, Fidelity's availability wins.
Who Should Choose Vanguard?
Despite Fidelity's advantages in convenience, Vanguard makes sense if:
- You appreciate client-owned structure philosophically
- You're investing $3,000+ per fund (Admiral Shares eligibility)
- You never use the app (website-only investor)
- You're already at Vanguard and switching costs aren't worth it
Our Verdict
Fidelity offers everything Vanguard does—low-cost index funds, no PFOF, excellent reputation—plus better technology, 24/7 service, zero expense ratio funds, and superior fractional shares. Unless Vanguard's ownership structure is important to you, Fidelity is the more complete package.
That said, both are exceptional choices. If you're currently at Vanguard and happy, there's no compelling reason to switch. You're in good hands either way.