Infographic: Index Fund Comparison - Wealth Engineers (2024)

These days almost every investor is familiar with index funds. These incredible tools put the wealth creating power of companies all around the world right at your fingertips. Even better, they do so in low cost, well-diversified, and tax-efficient vehicles that are accessible to nearly every investor.

The term “index fund,” however, is very generic. In it of itself, it doesn’t tell us as investors very much. There are literally hundreds of different indexes that a fund company can choose from when designing an index fund. Even within a given asset class (e.g. US large cap stocks), the choices can be confusing.

With that in mind, I designed the index fund comparison infographic below to help showcase the key differences between the indexes used in some of the most popular index funds available today.

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Index funds and ETFs made up 35% of stock and 17% of bond open-end funds by the end of 2013.

In terms of total dollars invested, index funds represented 14% of the stock market and 3% of the bond market.

Many investors assume that all index funds are the same. For example, a common misconception is that all index mutual funds or ETFs track the S&P 500 index.

In reality, there are literally hundreds of different indexes available that track a wide range of stock, bond, and other asset classes. Fund companies may track one or many different indexes.

Below, we compare U.S. large cap, mid cap, and small cap stock indexes from three major index providers: S&P Dow Jones, Russell, and CRSP.

Often, there are significant differences between indexes:

Number of stocks in the index
The breadth of the index relative to the entire U.S. stock market
The depth of the index in terms of market cap
How often the index is reconstituted or rebalanced
Which fund families license an index making it available to investors

U.S. Large Cap Stocks

S&P 500 Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $18.1 Billion
Smallest Company: $3.8 Billion

– Approximate Coverage of Total U.S. Market Cap: 80%
– Reconstitution: Quarterly
– Number of Stocks: 501
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Microsoft Corp
Johnson & Johnson
General Electric Co
Wells Fargo & Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co
Procter & Gamble Co

– Major Fund Families Using this Index

Russell 1000 Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $7.6 Billion
Smallest Company: $2.2 Billion*

– Approximate Coverage of Total U.S. Market Cap: 92%
– Reconstitution: Annually
– Number of Stocks: 1,026
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Microsoft Corp
Johnson & Johnson
General Electric Co
Wells Fargo & Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co
Procter & Gamble Co

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

CRSP U.S. Large Cap Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $12.8 Billion
Smallest Company: $753 Million

– Approximate Coverage of Total U.S. Market Cap: 85%
– Reconstitution: Quarterly
– Number of Stocks: 654
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Google Inc Class A
Microsoft Corp
Johnson & Johnson
Wells Fargo & Co
General Electric Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co

– Major Fund Families Using this Index

Vanguard

U.S. Mid Cap Stocks

S&P MidCap 400 Index

– Market Cap of:

Largest Company: $11.4 Billion
Median Company: $3.9 Billion
Smallest Company: $1.3 Billion

– Approximate Coverage of Total U.S. Market Cap: 7%
– Reconstitution: Quarterly
– Number of Stocks: 400
– Top 10 Constituents

Affiliated Managers Grp
Equinix Inc
SL Green Realty Corp
United Rentals Inc
Schein Henry Inc
Advance Auto Parts Inc
Realty Income Corp
Endo International plc
Hanesbrands Inc
Trimble Navigation Ltd

– Major Fund Families Using this Index

Russell Midcap Index

– Market Cap of:

Largest Company: $29.9 Billion
Median Company: $6.3 Billion
Smallest Company: $2.2 Billion*

– Approximate Coverage of Total U.S. Market Cap: 28%
– Reconstitution: Annually
– Number of Stocks: 832
– Top 10 Constituents

Noble Energy Inc
Applied Materials Inc
AON Plc
NetFlix Inc
Sempra Energy
Kroger Co
Crown Castle International Corp
Cigna Corp
Forest Laboratories Inc
SanDisk Corp

– Major Fund Families Using this Index

iShares

CRSP U.S. Mid Cap Index

– Market Cap of:

Largest Company: $22.4 Billion
Median Company: $8.3 Billion
Smallest Company: $753 Million

– Approximate Coverage of Total U.S. Market Cap: 15%
– Reconstitution: Quarterly
– Number of Stocks: 369
– Top 10 Constituents

Vertex Pharmaceuticals
Delphi Automotive
Western Digital Corp
Mylan Inc
Health Care REIT Inc
Moodys Corp
Southwest Airlines Co
Avalonbay Cmntys Inc
Chipotle Mexican Grill
Seagate Technology

– Major Fund Families Using this Index

Vanguard

U.S. Small Cap Stocks

S&P SmallCap 600 Index

– Market Cap of:

Largest Company: $5.6 Billion
Median Company: $1.1 Billion
Smallest Company: $156 Million

– Approximate Coverage of Total U.S. Market Cap: 3%
– Reconstitution: Quarterly
– Number of Stocks: 600
– Top 10 Constituents

Questcor Pharmaceuticals
Centene Corp
LaSalle Hotel Properties SBI
Teledyne Technologies Inc
Toro Co
Darling Ingredients Inc
Belden Inc
Tanger Factory Outlet Centers
Synaptics Inc
Moog Inc A

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

Russell 2000 Index

– Market Cap of:

Largest Company: $4.5 Billion
Median Company: $751 Million
Smallest Company: $169 Million*

– Approximate Coverage of Total U.S. Market Cap: 9%
– Reconstitution: Annually
– Number of Stocks: 1,975
– Top 10 Constituents

InterMune Inc
Prosperity Bancshares Inc
Aspen Technology Inc
WEX Inc
Isis Pharmaceuticals Inc
Tenneco Inc
PolyOne Corp
Investors Bancorp Inc
Ultimate Software Group Inc
Brunswick Corp

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

CRSP U.S. Small Cap Index

– Market Cap of:

Largest Company: $7.6 Billion
Median Company: $1.5 Billion
Smallest Company: $16 Million

– Approximate Coverage of Total U.S. Market Cap: 13%
– Reconstitution: Quarterly
– Number of Stocks: 1,449
– Top 10 Constituents

Hillshire Brands Co
Salix Pharmaceutical
Foot Locker Inc
Arthur J Gallagher & Com
Harma Intl Inds Inc
Alkermes Plc
Gannett Inc
Packaging Corp Amer
Rite Aid Corp
Snap On Inc

– Major Fund Families Using this Index

Vanguard

[box style=”2″]
Data as of June 30, 2014, except where noted.
* Data as of May 31, 2014

Sources:
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial
Russell Investments
Center for Research in Security Prices at Chicago Booth
The Vanguard Group, Inc.

Disclosures
For important disclosures regarding this and all other material published by Wealth Engineers, please visit: wealthengineersllc.com/disclosures
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Infographic: Index Fund Comparison - Wealth Engineers (2024)

FAQs

Can you become a millionaire from index funds? ›

Still, there's good news from this chart: With the right investing discipline, a solid index fund and time, there's a good chance you can become a millionaire, even if you understand little about the stock market. In fact, if you follow this plan, it may be difficult to avoid becoming a millionaire.

Read On ›

Do rich people use index funds? ›

“When you're ultra wealthy you do have access to some unique investment opportunities, but the vast majority of ultra wealthy people's portfolios consist of index funds, ETFs, and mutual funds, and maybe some sector funds,” she says.

Discover More Details ›

Can you make money on index funds? ›

Individual stocks may rise and fall, but indexes tend to rise over time. With index funds, you won't get bull returns during a bear market. But you won't lose cash in a single investment that sinks as the market turns skyward, either. And the S&P 500 has posted an average annual return of nearly 10% since 1928.

Why do index funds exist? ›

"Index funds are a low-cost way to track a specific group of investments, which can be more broadly diversified than individual stocks and simpler to buy than each of the individual holdings within the index," she said.

See Details ›

What are the 4 index funds to retire a millionaire? ›

Getting down to business. You can build a powerful, global portfolio with these four Vanguard ETFs: Vanguard Total Stock Market ETF (NYSEMKT: VTI), Vanguard Total International Stock ETF (NASDAQ: VXUS), Vanguard Total Bond Market ETF (NASDAQ: BND), and Vanguard Total International Bond ETF (NASDAQ: BNDX).

Find Out More ›

How to invest $100 000 to make $1 million? ›

Buy a low-cost index fund that tracks the S&P 500; your $100,000 could grow to $1 million in about 23 years. You'll get there even faster by investing additional funds. Add $500 monthly and reach $1 million in just 19 years. Of course, past results don't guarantee future outcomes, but history is on investors' side.

Tell Me More ›

Is there a downside to index funds? ›

Disadvantages of index funds. While index funds do have benefits, they also have drawbacks to understand before investing. An index fund tends to include both high- and low-performing stocks and bonds in the index it's tracking. Any returns you earn would be an average of them all.

Show Me More ›

Is it smart to put all your money in an index fund? ›

To be sure, if you have the time, knowledge, and desire to create a portfolio of individual stocks, by all means, go for it. But even if you do own individual stocks, index funds can form a solid base for your portfolio. Index funds offer investors of all skill levels a simple, successful way to invest.

Explore More ›

Why does Warren Buffett like index funds? ›

Buffett's rationale behind endorsing S&P 500 index funds is rooted in their simplicity and effectiveness. He argues that attempting to outperform the market is futile for most investors, and instead, they should seek exposure to the broad U.S. stock market through low-cost index funds.

Why I don't invest in index funds? ›

Indexes are set portfolios. If an investor buys an index fund, they have no control over the individual holdings in the portfolio. You may have specific companies that you like and want to own, such as a favorite bank or food company that you have researched and want to buy.

Show Me More ›

Can the S&P 500 make you a millionaire? ›

One way to become a millionaire

Over its history, the S&P 500 has generated an average annual return of 9%, including re-invested dividends. At that rate, even a middle-class income is enough to become a millionaire over time.

Read The Full Story ›

How much can an index fund make in a year? ›

But over time indexes have made solid returns, such as the S&P 500's long-term record of about 10 percent annually. That doesn't mean index funds make money every year, but over long periods of time that's been the average return.

See Details ›

Do index funds double your money? ›

According to Standard and Poor's, the average annualized return of the S&P index, which later became the S&P 500, from 1926 to 2020 was 10%. 1 At 10%, you could double your initial investment every seven years (72 divided by 10).

Get More Info Here ›