Kornelija Kazlauskas 
Are you an investor looking for a way to grow your wealth? If so, understanding the differences between VIGAX and VTSAX can be critical in helping you decide which fund is best suited to achieve your financial goals. At face value, it may seem that these two funds are quite similar – but upon close examination, there are important distinctions between them that must be considered when deciding which to invest in. In this blog post, we’ll dive into the particulars of VIGAX vs. VTSAX and help you determine which is right for meeting your investment objectives.
What Is VIGAX?
The Vanguard Growth Index Fund Admiral Shares can be identified with the ticker symbol VIGAX. It is a mutual fund provided by Vanguard, among the largest investment management firms globally. The fund is actively managed.
The VIGAX fund strives to grow investors’ capital in the long run by investing in the growth stocks of big companies in the U.S. stock market. It follows an index-based investment strategy and aims to match the performance of the CRSP US Large Cap Growth Index, a standard index measuring the returns of growth stocks of large-cap companies in the U.S.
Pros of VIGAX:
- Diversification: Investors can benefit from instant diversification by investing in VIGAX, a mutual fund that focuses on a wide variety of large-cap growth stocks. This may help to decrease the overall risk of an investor’s portfolio.
- Professional Management: The experienced investment professionals managing VIGAX select stocks based on growth potential, resulting in potentially higher returns compared to a passive investment strategy.
- Low Expense Ratio: VIGAX has a relatively low expense ratio compared to other actively managed mutual funds. This can potentially help investors save money in the long run.
- Admiral Shares: VIGAX has Admiral Shares with a lower expense ratio than the Investor Shares. This makes them a more cost-effective option for investors who wish to reduce their expenses.
Cons of VIGAX:
- No Guarantees: Like any other investment, there is no guarantee of a positive return when investing in VIGAX, and there are associated risks.
- Active Management: The investment team’s ability to choose the correct stocks determines the success of VIGAX, which is an actively managed mutual fund. This may result in increased fees and expenses, and poor decisions made by the investment team could lead to underperformance.
- Large-Cap Focused: VIGAX focuses on investing in large-cap growth stocks. However, this strategy may restrict its potential to generate higher returns in more specialized market segments.
- Market Fluctuations: The value of VIGAX can vary because of market volatility, economic conditions, and other factors beyond the control of the fund manager, just like any other investment.
What Is VTSAX?
The Vanguard Total Stock Market Index Fund Admiral Shares is a mutual fund offered by Vanguard, one of the world’s largest investment management companies. Its ticker symbol is VTSAX, and it is passively managed.
The VTSAX fund invests in a range of stocks from companies of all sizes and industries in the U.S. With almost 4,000 stocks listed on major U.S. stock exchanges, the fund aims to provide investors with extensive exposure to the U.S. equity market. It tracks the CRSP US Total Market Index for its performance.
Pros of VTSAX:
- Diversification: VTSAX is a mutual fund that monitors the progress of the whole U.S. stock market. It enables investors to diversify their portfolios instantly across various companies of different sizes, sectors, and industries. This can lower the overall risk of their investments.
- Low Expense Ratio: Compared to other mutual funds, VTSAX boasts a significantly lower expense ratio, which could ultimately result in greater long-term savings for its investors.
- Passive Management: The VTSAX is an index fund that is managed passively, meaning there is no need for investment professionals to actively select stocks or time the market. This reduces fees and expenses and less dependence on the investment team’s expertise.
- Admiral Shares: Investors can benefit from choosing Admiral Shares over Investor Shares in VTSAX due to the former’s lower expense ratio. This makes them a cost-effective option for those who want to keep their expenses to a minimum.
Cons of VTSAX:
- No Guarantees: Investing in VTSAX involves risks, just like any other investment, and there is no assurance that investors will make a profit on their investment.
- Market Fluctuations: The value of VTSAX may change because of market instability, economic circumstances, and other external factors that the fund manager cannot control.
- U.S. Focused: The VTSAX fund only invests in stocks from the United States. This may potentially lower its ability to generate higher returns in specialized market segments outside the U.S.
- Limited Flexibility: As VTSAX follows the performance of the overall US stock market, investors do not have the option to tailor their portfolios to match their investment preferences or objectives.
VIGAX vs. VTSAX: A Comparison
We can compare VIGAX and VTSAX to help you make an informed investment decision.
Comparison of VIGAX and VTSAX:
- Investment Objective: VIGAX focuses on achieving long-term capital growth by investing in big companies with high potential, while VTSAX aims for extensive coverage of the US stock market through a diverse portfolio of stocks from companies of different sizes, sectors, and industries.
- Investment Strategy: VIGAX is a fund whose stocks are selected actively to surpass the market, while VTSAX is an index fund whose goal is to track the performance of the whole U.S. stock market passively.
- Expense Ratio: VIGAX has a higher expense ratio than VTSAX because it involves active management and stock selection in its fund management.
- Risk Profile: The risk profile of VIGAX is possibly higher than that of VTSAX because VIGAX concentrates on growth stocks and uses an active management strategy, whereas VTSAX has a diversified portfolio and follows a passive management approach, indicating a more moderate risk profile.
- Investment Minimum: Admiral Shares of both VIGAX and VTSAX require an initial investment of at least $3,000 and have lower expense ratios than the Investor Shares.
If your goal is long-term capital growth and you’re okay with more risk, VIGAX could be a good choice. But if you want moderate risk and broad coverage of the entire US stock market, VTSAX might be a better fit for your investment objectives.
Conclusion:
To sum up, Vanguard offers two widely-known mutual funds – VIGAX and VTSAX. VIGAX emphasizes large-cap growth stocks and is subject to active management, whereas VTSAX aims to provide extensive coverage of the US equity market and is managed passively. Each fund has its own advantages and disadvantages, and determining which one to choose primarily depends on personal investment objectives and willingness to take risks. It is essential to weigh both options thoroughly and seek advice from a financial expert before investing.
