The 5 Best S&P 500 Index Funds (and the Worst One)

Not all index funds are created equal. Here is a list of the 5 best S&P 500 index funds, followed by the worst fund we could find that you should avoid.

best S&P 500 index funds

All S&P 500 index funds are more or less the same, right? Well, not exactly. There are of course similarities. They all track the S&P 500 index, more or less.

But there are also some key differences. The most notable difference is in the fees. Since they’re constructed to closely match the underlying index, fees stay within a tight range with the best funds. But some terrible funds lurk out there that charge a small fortune.

A difference in fees of say 0.01% or 0.02% may not matter much. But if  it’s a choice between a fund with 0.05% and 0.15%, you should certainly favor the lower of the two. A 0.10% difference can have a huge effect on your wealth over 20 or 30 years.

So we’ve put together a list of the five best S&P 500 index funds. Then we should you an example of an awful S&P 500 fund so you know what to watch out for.

The 5 Best S&P 500 Index Funds

 1.   Vanguard S&P 500 ETF

Founded in 2010, Vanguard S&P 500 ETF (VOO) has had an average annual return of 16.08% since, compared with 16.12% for the S&P 500.

Expense ratio: 0.04%

Minimum investment: $3,000

Fund size: $391.4 billion

Beta: 1.00

Performance:

  • 1 year: 18.69%
  • 3 year: 11.51%
  • 5 year: 14.78%
  • 10 year: N/A – founded 9/7/2010
  • Current P/E ratio: 23.2x
  • Number of stocks: 506

2.   iShares Core S&P 500 ETF

Founded in 2000, iShares S&P 500 ETF (IVV)has turned in an average annual return of 5.80% since inception, compared with 5.87% for the S&P 500 over the same term.

Expense ratio: 0.04%

Minimum investment: $0

Fund size: $147 billion

Beta: 1.00

Performance: (1/31/2018)

  • 1 year: 26.38% (S&P Index 26.41%)
  • 3 year: 14.61% (S&P Index 14.66%)
  • 5 year: 15.85% (S&P Index 15.91%)
  • 10 year: 9.73% (S&P Index 9.78%)
  • Current P/E ratio: 21.94x
  • Number of stocks: 505

3.   Schwab S&P 500 Index Fund 

Founded in 1997, Schwab S&P 500 Index Fund (SWPPX) has turned in an average annual return of 7.98% since inception.

Expense ratio: 0.03%

Minimum investment: $1

Fund size: $33.9 billion

Beta: 1.00

Performance: (1/31/2018)

  • 1 year: 26.36% (S&P Index 26.41%)
  • 3 year: 14.56% (S&P Index 14.66%)
  • 5 year: 15.80% (S&P Index 15.91%)
  • 10 year: 9.73% (S&P Index 9.78%)
  • Current P/E ratio: 19.02x
  • Number of stocks: 507

4.   Fidelity Spartan 500 Index Investors Shares

Founded in 1988 and known as the Spartan 500 Index Fund–Investor Class (FUSEX) until 6/14/2016, the fund has a lifetime average annual total return of 10.37%, compared with 10.54% by the S&P 500 over the same timeframe.

Expense ratio: 0.09%

Minimum investment: $2,500

Fund size: $149.7 billion

Beta: 1.00

Performance: (1/31/2018)

  • 1 year: 26.29% (S&P Index 26.41%)
  • 3 year: 14.56% (S&P Index 14.66%)
  • 5 year: 15.81% (S&P Index 15.91%)
  • 10 year: 9.71% (S&P Index 9.78%)
  • Current P/E ratio: 23.2x
  • Number of stocks: 507

5.   Vanguard 500 Index Fund Investors Share

Founded in 1976, this fund (VFINX) has an average annual return of 11.24% since its inception.

Expense ratio: 0.14%

Minimum investment: $3,000

Fund size: $391.4 billion

Beta: 1.00

Performance:

  • 1 year: 26.24% (S&P Index 26.41%)
  • 3 year: 14.51% (S&P Index 14.66%)
  • 5 year: 15.74% (S&P Index 15.91%)
  • 10 year: 9.65% (S&P Index 9.78%)
  • Current P/E ratio: 23.2x
  • Number of stocks: 506

The Worst S&P 500 Index Fund

While we love index funds here at Dough Roller, not all index funds are created equal. In fact, there are some really terrible S&P 500 index funds out there.

Why do we mention this? It’s important not to fall into the trap of believing that all index funds are low cost. They aren’t. Some index funds are more expensive than many actively managed funds.

Here’s an example.

Rydex S&P 500 C

The Rydex S&P 500 C (RYSYX), offered by Guggenheim Investments, has been labeled the worst index fund in the world. It’s hard to argue with this conclusion.

Expense ratio: 2.33%

Fund size: $202.6 million

Performance:

  • 1 year: 15.77%
  • 3 year: 8.86%
  • 5 year: 12.08%
  • 10 year: 7.31%

Because of its fees, it significantly underperforms the S&P 500 index, guaranteed. Simply put, there’s no reason for an investor to consider such an awful fund.

And it’s not alone. There are a number of similar funds that charge an arm and a leg. So don’t blindly invest in an index fund. Make sure you understand the fees first and look to open a good discount broker to get started.

How to Check Your Investment Fees

Managing multiple 401k, IRA and other investment accounts is challenging, to say the lest. The best tool we’ve found for the job is called Personal Capital. It’s a totally free tool that enables you to connect all of your investment accounts in one place. From there you can manage your contributions, track performance, and even keep tabs on your investment fees.

Personal Capital also offers a free Retirement Planner. This tool will show you if you are on track to retire on your terms.

You can analyze not only your 401k, but also IRAs and taxable accounts.

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Topics: Investing

2 Responses to “The 5 Best S&P 500 Index Funds (and the Worst One)”

  1. ikomrad

    It’s difficult to compare funds without using the same time frames for each one. Performance over the last 5/10/15 years for each is probably a good way to bench mark them against each other.

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