What is the different between VFINX and VFIAX?

Question

Hi,

I'm new to mutual fund. What is the different between VFINX (Vanguard 500 Index Fund) and VFIAX (Vanguard 500 Index Admiral Fund)?

Do they track the same index? How come VFIAX has expense ratio only 0.09% while VFINX has 0.18%?

Thank you.

Answer 1

<<<What is the different between VFINX and VFIAX?>>>

It appears the biggest difference is the minimum investment required.

"Vanguard Admiral Shares are not for the individual investor with limited funds, because this share class requires an initial investment of $100,000 to get a rock-bottom annual expense ratio of .09%. For those who are starting their investment program or those who currently have more modest means, shares in the Vanguard 500 Index Fund (VFINX) are an alternative. VFINX shares have a low annual expense ratio of .18% and a minimum initial deposit requirement of $3,000 in a taxable account."

<<<Do they track the same index?>>>

Yes. Both track the S&P 500 index.

<<<How come VFIAX has expense ratio only 0.09% while VFINX has 0.18%?>>>

I assume because the high minimum for VFIAX reduces the number of transactions, reducing the expenses of running the fund.

Answer 2

VFIAX is for investors with more monry to invest. Initial Investment:is $100,000 for VFIAX.

VFINX Min Initial Investment: $3,000.

It costs Vanguard more money to support  lower minimum investment funds due to required reports so expense ratio is higher on VFINX. ETF's are also available to track S&P 500, such as SPY.