I've been a Vanguard investor for years. The broad, straightforward fund lineup, the ultra-low fees, and simple-to-use online platform made it an easy choice. I felt like I needed nothing and had nothing else to really investigate.
But when Fidelity launched its lineup of zero expense ratio funds, I took a moment to reconsider. These funds were only available on Fidelity's platform, and I'd have to open an account there if I wanted to buy them (I'm a sucker for low fees!).
So I started working through the Vanguard vs. Fidelity debate. Was there enough being offered by Fidelity to really make me go through the effort of switching my entire relationship to a new company?
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Key takeaways
- Overall, Vanguard is considered a more conservatively run shop both in product offerings and fees. Fidelity tends to offer more products and is more aligned with current industry trends.
- Fidelity and Vanguard are both industry low-cost leaders. Broad index and sector funds are especially cheap.
- Fidelity has a more robust research platform and is better for overall portfolio analysis and management.
- For most investors, Vanguard and Fidelity both provide just about everything you'll need.
- Fidelity's product offerings and research platform may entice more traders.
Vanguard vs. Fidelity: The type of investor you are matters
I've always been a long-term investor. I don't trade much. I don't really delve into niche, thematic, or exotic products. I keep my overall risk pretty contained. Not very exciting by most standards. That's a big reason I chose Vanguard initially. I just needed access to broad index, sector, and factor products that I could own as cheaply as possible. For me, it was a great fit.
I'm also an exchange-traded fund (ETF) investor. Fidelity was comparatively late getting into the ETF space in a major way, and that's another reason I went with Vanguard. That's changed over the past several years though. Now, Fidelity offers pretty much all the products that Vanguard does, including a few strategies that they don't.
Fidelity, in my opinion, offers a more robust research platform. I can plug any ETF ticker into Fidelity's site and immediately get top holdings, sector and country tilts, option chains, analysts' ratings, and the latest news. Vanguard simply doesn't match that. If you're a more frequent stock and/or fund trader, Fidelity has the advantage.
If you're a long-term, buy-and-hold investor, both companies will work great, but I still favor Vanguard. The long-term familiarity factor is my tiebreaker.
Vanguard vs. Fidelity: Investor comparison table
| Feature | Vanguard | Fidelity |
|---|---|---|
| Trading costs | $0 commissions. | $0 commissions. |
| Expense ratios | Industry leader; often the cheapest within a category. | Equally competitive; in some cases undercutting Vanguard. |
| Platform experience | Simple and clean; straightforward interface. | More robust and detailed platform. |
| Research capabilities | More limited research tools. | Deeper analytics, research and product screeners. |
| Branch network | Limited physical locations. | Large national network. |
| Crypto access | Access provider; only recently added access to crypto ETFs. | Broader participant and crypto ETF issuer. |
| Leveraged fund access | Restricted. | Full access. |
| Investor type | Long-term, low-cost passive investors looking for simplicity. | Long-term investors who want research, tools, trading, and product access. |
One other big differentiator that's worth pointing out here is crypto and leveraged product access. Vanguard, as mentioned, is a very conservative institution. They didn't offer access to crypto and Bitcoin ETFs for the longest time. The reasoning given was very Vanguard-ian.
- Crypto had no intrinsic value (e.g., cash flows, earnings).
- It was too volatile.
- It didn't belong as part of a long-term asset allocation.
- Crypto investors were prone to performance chasing and poor timing decisions.
In short, it wasn't viewed as consistent with the Vanguard brand. It was only late last year when Vanguard finally relented and began offering them on their platform after their thinking had changed.
They haven't relented on leveraged products though. Fidelity offers access to 2x and 3x leveraged and inverse products. Vanguard does not.
Vanguard vs. Fidelity: The final verdict
In the end, I chose to stick with Vanguard. For me, there wasn't enough there to justify the switch.
To be fair, I was interested in Fidelity's Bitcoin ETF and ZERO account lineup. I did consider adding a supplementary Fidelity brokerage account to my existing Vanguard account. But my core portfolio positions in the Vanguard Total Stock Market ETF and Vanguard Total International Stock ETF were already cheap enough that a few basis points wasn't a dealbreaker. If I were a more frequent trader, there's a better chance I would have made the switch.
In the end, Vanguard and Fidelity are both great options. The choice really comes down to what type of investor you are.
