VTSMX vs. VTSAX — What's the Difference?
By Tayyaba Rehman — Published on December 5, 2023
VTSMX is Vanguard's Total Stock Market Index Fund Investor Shares, while VTSAX is the Admiral Shares version of the same fund, with a lower expense ratio.
Difference Between VTSMX and VTSAX
Table of Contents
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Key Differences
VTSMX represents Vanguard's Total Stock Market Index Fund under the category of Investor Shares. VTSAX, on the other hand, is the Admiral Shares variant of this very fund.
A key distinction between VTSMX and VTSAX is the expense ratio. VTSAX, being the Admiral Shares, generally has a lower expense ratio compared to VTSMX.
To invest in VTSMX, there historically has been a lower minimum initial investment requirement. Conversely, VTSAX typically requires a more substantial initial investment, owing to its Admiral Shares status.
Both VTSMX and VTSAX are designed to track the entire U.S. stock market, providing a comprehensive exposure. However, VTSAX, with its lower expense ratio, might provide slightly better returns over time than VTSMX.
While both funds aim for the same investment objective, the distinction in share class - Investor Shares for VTSMX and Admiral Shares for VTSAX - results in the differences in expense ratios and initial investment requirements.
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Comparison Chart
Share Class
Investor Shares
Admiral Shares
Expense Ratio
Typically higher than VTSAX
Lower compared to VTSMX
Initial Investment Requirement
Historically lower
Historically higher
Fund Objective
Track the entire U.S. stock market
Same as VTSMX
Returns
Slightly lower due to higher expense ratio
Slightly higher due to lower expense ratio
Compare with Definitions
VTSMX
Part of Vanguard's suite of index funds with a specific expense ratio.
They reviewed the performance of VTSMX to assess its viability for their portfolio.
VTSAX
Part of Vanguard's premium suite of index funds.
Financial advisors often recommend VTSAX for its cost savings.
VTSMX
Vanguard's Total Stock Market Index Fund under Investor Shares.
She chose VTSMX for her retirement account because of the lower initial investment requirement.
VTSAX
Vanguard's Total Stock Market Index Fund under Admiral Shares.
He shifted his investment to VTSAX after reaching the required minimum balance.
VTSMX
Requires a particular minimum amount for initial investment.
The Smiths started their investment journey with VTSMX due to its accessibility.
VTSAX
Offers a broader exposure to the U.S. stock market with a lower expense ratio.
She was drawn to VTSAX due to its cost-effective structure.
VTSMX
Known for its comprehensive market tracking strategy.
As a beginner, she was advised to consider VTSMX for diversified exposure.
VTSAX
Requires a higher initial investment compared to its Investor Shares counterpart.
Once they had enough capital, they transitioned to VTSAX for its benefits.
VTSMX
A broad market index fund tracking the entire U.S. stock market.
He appreciated the comprehensive exposure offered by VTSMX.
VTSAX
Renowned for its efficient market tracking and lower costs.
He believed VTSAX could optimize his returns in the long run.
Common Curiosities
Which of the two requires a higher initial investment?
VTSAX typically requires a higher initial investment than VTSMX.
Why might someone choose VTSAX over VTSMX?
Due to its lower expense ratio, VTSAX might offer slightly better returns over time.
Do both funds have the same exposure to the stock market?
Yes, both VTSMX and VTSAX provide comprehensive exposure to the U.S. stock market.
How does VTSAX differ from VTSMX?
VTSAX is the Admiral Shares version of VTSMX, with a lower expense ratio.
Can I transition from VTSMX to VTSAX?
Yes, once you meet the minimum balance requirement for VTSAX, you can shift your investment.
Why do Admiral Shares have a lower expense ratio?
Admiral Shares, like VTSAX, reward investors for higher investments with lower costs.
What does VTSMX represent?
VTSMX is Vanguard's Total Stock Market Index Fund under Investor Shares.
Is the investment objective the same for both funds?
Yes, both funds aim to track the entire U.S. stock market.
Can I invest in both funds simultaneously?
Yes, an investor can hold positions in both VTSMX and VTSAX simultaneously.
Which fund is more cost-effective?
VTSAX, being an Admiral Shares fund, is generally more cost-effective than VTSMX.
Is VTSMX suitable for beginners?
VTSMX, with its lower initial investment requirement, can be suitable for beginners.
Can I convert my VTSMX shares to VTSAX shares?
Yes, once eligible, you can convert your VTSMX shares to VTSAX without incurring a taxable event.
Which of the two funds has been around longer?
VTSMX was introduced before VTSAX.
Are the returns for VTSMX and VTSAX significantly different?
While the funds aim for the same objective, VTSAX might offer slightly better returns due to its lower expense ratio.
Are both funds managed by Vanguard?
Yes, both VTSMX and VTSAX are managed by Vanguard.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
