Vanguard versus Fidelity: Multidimensional Comparison of the Index Funds and ETFs of the Two Largest Mutual Fund Families

This paper compares Vanguard and Fidelity on 21 comparable funds in five aspects: performance, tax-efficiency, cost, diversification, benchmark and tracking precision. The conclusions are as follows: first, for pre-tax return, the difference between Vanguard and Fidelity is small, but Vanguard is the clear winner in after-tax return; second, Vanguard is much more tax-efficient than Fidelity; third, for the cost, Fidelity has lower expense ratio than Vanguard in all sample funds, while Vanguard has lower turnover, and both Vanguard and Fidelity have their own short-term redemption fee policy; fourth, Vanguard funds are more diversified which should reduce uncompensated risk; fifth, Fidelity funds have higher tracking precision to their benchmarks than Vanguard funds, but the difference is very small.