For many long-term investors, the S&P 500 remains one of the simplest ways to gain exposure to the largest publicly traded companies in the United States. But choosing an S&P 500 fund is no longer just a question of “buying the market.” Investors can choose between mutual funds and ETFs, between ultra-low expense ratios and deep trading liquidity, and between three of the most influential names in asset management: Fidelity, Vanguard and State Street.
At the center of this comparison is the Fidelity 500 Index Fund, known by its ticker FXAIX. It competes directly with the Vanguard 500 Index Fund Admiral Shares, the Vanguard S&P 500 ETF, the SPDR S&P 500 ETF Trust and the lower-cost SPDR Portfolio S&P 500 ETF.
The underlying idea is similar across these products: track the S&P 500. The differences are in cost, structure, accessibility and how each fund is likely to be used.
What do these funds actually track?
The S&P 500 is designed to measure the performance of the large-cap segment of the U.S. equity market. According to S&P Dow Jones Indices methodology, the broader S&P U.S. Indices family is weighted by float-adjusted market capitalization, which means larger companies have a bigger influence on index performance.
That matters for investors. An S&P 500 fund is not an equal bet on roughly 500 companies. It is a market-cap-weighted exposure to U.S. large caps. When mega-cap technology stocks lead the market, these funds can benefit strongly. When the largest names fall, the same concentration can work in the opposite direction.
In other words, Fidelity, Vanguard and State Street are mostly competing on execution. The index exposure is broadly similar. The wrapper, cost and investor experience are different.
Read also: Fidelity Total Market Index: Guide to the FSKAX Fund
Fidelity 500 Index Fund: the low-cost mutual fund challenger
The Fidelity 500 Index Fund is one of the strongest options for investors who want plain-vanilla S&P 500 exposure in mutual fund form. Its biggest advantage is cost. Fidelity lists FXAIX with an expense ratio of 0.015%, making it one of the cheapest major S&P 500 index funds available to U.S. investors.
That fee is extremely low. On a $10,000 investment, an annual expense ratio of 0.015% works out to about $1.50 per year before any other costs or tax considerations. For a long-term buy-and-hold investor, that matters because fees compound in the wrong direction: every basis point paid to a fund provider is a basis point not left in the investor’s account.
The Fidelity 500 Index Fund is especially attractive for investors who already use Fidelity as their brokerage or retirement platform. It is simple, cheap and built for long-term accumulation rather than intraday trading. The trade-off is that, as a mutual fund, it does not trade throughout the day like an ETF. Orders are generally executed at the end-of-day net asset value, which is suitable for many retirement investors but less flexible for active traders.
Some readers may search for “idelity 500 index fund” because of a typo, but the correct fund name is Fidelity 500 Index Fund, with ticker FXAIX.
Vanguard: scale, reputation and ETF dominance
Vanguard remains one of the most important names in index investing. The Vanguard 500 Index Fund Admiral Shares has an expense ratio of 0.04%, while the Vanguard S&P 500 ETF charges 0.03%.
The difference between 0.015% and 0.03% may look tiny, and for small portfolios it often is. But for larger balances and long holding periods, cost differences become more visible. Still, Vanguard’s advantage is not just price. It has brand trust, massive scale and one of the strongest ETF franchises in the world.
That scale has only become more visible. In June 2026, Reuters reported that Vanguard’s VOO became the first ETF in history to exceed $1 trillion in assets, less than 18 months after overtaking State Street’s SPY in assets.
For investors who prefer ETFs, VOO is arguably Vanguard’s cleanest S&P 500 product. It combines a very low expense ratio with daily tradability and huge market scale. VFIAX, meanwhile, remains more suitable for investors who prefer mutual funds, automatic investments and retirement-style accumulation.
State Street: SPY for liquidity, SPYM for low cost
State Street is the historic heavyweight in S&P 500 ETFs because of the SPDR S&P 500 ETF Trust, better known as SPY. The fund launched in January 1993 and was the first U.S.-listed ETF. State Street lists SPY with a gross expense ratio of 0.0945%.
Compared with Fidelity FXAIX, Vanguard VOO or State Street SPYM, SPY is more expensive to hold. But SPY’s appeal is not mainly its fee. Its appeal is liquidity. State Street describes SPY as a highly liquid tool for S&P 500 exposure, while positioning SPYM as a lower-cost option for long-term investors.
That distinction is crucial. SPY may make more sense for institutions, traders and investors who need very tight spreads, deep options markets and tactical flexibility. SPYM, on the other hand, is State Street’s stronger answer for buy-and-hold investors. It tracks the S&P 500 and carries a gross expense ratio of 0.02%, making it cheaper than Vanguard VOO and VFIAX, though still slightly more expensive than Fidelity FXAIX.
Read also: Tech dominated list of S&P 500 index
Fee comparison: who wins?
On expense ratio alone, Fidelity wins among the major products in this comparison.
The Fidelity 500 Index Fund charges 0.015%. State Street’s SPYM charges 0.02%. Vanguard VOO charges 0.03%, Vanguard VFIAX charges 0.04%, and State Street SPY charges 0.0945%.
For a long-term investor, this creates a fairly clear ranking. FXAIX is the cheapest mutual fund option in this group. SPYM is the cheapest ETF option in this comparison. Vanguard VOO is slightly more expensive than SPYM but benefits from enormous scale. SPY is the most expensive, but it compensates with unmatched liquidity and trading infrastructure.
The key lesson is that “best” depends on use case. The cheapest product is not always the best trading product, and the most liquid product is not always the best long-term holding.
Mutual fund vs ETF: the real decision
The Fidelity 500 Index Fund and Vanguard VFIAX are mutual funds. Vanguard VOO, State Street SPY and State Street SPYM are ETFs. For many investors, this distinction matters more than the tiny fee gap.
Mutual funds can be convenient for automatic investments, retirement accounts and investors who do not care about intraday pricing. ETFs are more flexible because they trade throughout the day like stocks. They can also be easier to move between brokerage platforms and may offer tax-efficiency advantages in taxable accounts, depending on the investor’s jurisdiction and personal situation.
For someone investing monthly in a retirement account, FXAIX can be an excellent low-cost core holding. For someone building a taxable brokerage portfolio and wanting ETF flexibility, VOO or SPYM may be more practical. For a trader or institution moving large sums in and out of the S&P 500, SPY’s liquidity may justify its higher annual fee.
The hidden risk: S&P 500 concentration
All of these funds share the same broad risk: they are heavily exposed to the largest U.S. companies. Because the S&P 500 is market-cap weighted, its performance can be strongly influenced by a relatively small group of mega-cap stocks.
That has worked well during periods when U.S. technology and growth stocks have led the market. But it also means investors are not as diversified as the phrase “500 companies” might suggest. If the largest names fall sharply, an S&P 500 index fund will feel it.
This does not make the Fidelity 500 Index Fund, Vanguard VOO or State Street SPYM bad products. It simply means they should be understood for what they are: U.S. large-cap equity funds, not complete global portfolios.
Which S&P 500 fund is best?
For the lowest-cost mutual fund exposure, the Fidelity 500 Index Fund is the strongest candidate. FXAIX is simple, extremely cheap and well suited to long-term investors who already use Fidelity.
For ETF investors who value scale and brand reputation, Vanguard VOO is hard to ignore. Its expense ratio is low, its asset base is enormous, and its position in the ETF market has strengthened significantly.
For State Street, the answer depends on the investor. SPY remains the classic trading vehicle, especially for investors who value liquidity and options-market depth. SPYM is the more logical State Street choice for long-term investors focused on keeping annual fees low.
The final verdict is therefore not one winner, but three different use cases. Fidelity FXAIX wins on mutual fund cost. Vanguard VOO wins on ETF scale and long-term mainstream appeal. State Street SPY wins on liquidity, while SPYM gives State Street a much sharper low-cost product for buy-and-hold investors.
For most ordinary investors, the battle of the index funds comes down to a simple question: do you want the cheapest mutual fund, the biggest low-cost ETF, or the most liquid trading vehicle? Once that is clear, the choice between Fidelity, Vanguard and State Street becomes much easier.
