Made from Concentrate

Financial Planning, August, 2002 by Craig L. Israelsen

Are large-cap U.S. equity index funds really all that different from each other? To answer that question, let's look at three well-known index funds: Vanguard Index 500, Schwab 1000 and Vanguard Total Stock Index.

The Vanguard Index 500 seeks to replicate the performance of the S&P 500 Index, an index dominated by large-cap U.S. stocks. The Schwab 1000 mimics the Schwab 1000 Index, an index consisting of the largest 1,000 publicly traded U.S. companies. Finally, the Vanguard Total Stock Index seeks to replicate the aggregate performance of the Wilshire 5000 Total Stock Index, an index which consists of all U.S. stocks traded regularly in the NYSE, AMEX and OTC.

Consider the annual returns of the three funds over the past eight years. As shown by the similar return...