The Benchmarks-VFINX SPY VOO

For this post I will look at the history of the VFINX, SPY and compare them both to the Vanguard S&P 500 ETF-symbol VOO.

Comparing VFINX and SPY is a good starting point. We need to see if both benchmarks, which measure the same thing, ARE the same. VFINX and VOO is a valid comp because the VOO is the ETF version of the VFINX. The ETF is just another wrapper for the same content. Investors need to know if wrappers matter.

There ARE other index mutual funds and index ETFs  (such as IVV) but they all started much later than the VFINX and SPY and I am not sure the comps of these others will be useful to investors. Since these all measure the same thing, we can expect them to be the same. Below are the history and and data for the VFINX, SPY and VOO.

Full History

Chart 1. Full History

Table 1. Full History

There ARE differences. For some reason, when compared head to head for full years only, the mutual fund has a higher average annual return and lower standard deviation of annual returns than either ETF. Most interesting may be the VOO data which shows a significantly lower return than its mutual fund cousin.

Does the ETF reduce return when compared to the same thing in a mutual fund? Maybe Vanguard has an answer.  The risk reward chart shows VFINX, the top left data point, outperforming with higher return and lower risk than either the SPY, middle point, and VOO, the far left point.

Chart 2. Risk Reward

Despite the return difference, the correlations are very high, as expected.

Table 2. Correlation

VFINX versus SPY

This is head to head vami chart starting with the start date for SPY, 1/29/1993 = 1000.


Chart 3. VFINX versus SPY

Table 3. VFINX versus SPY

When I first looked at this, I thought there was an error starting with the 3/9/2009 recession low. Here are the peak to trough to current date returns.

Table 4. Peak to Recession Trough to Present

VFINX mutual fund sharply outperformed SPY for these critical periods. I still don't get it, but I cannot find an error.

VFINX versus VOO

Here may be the most remarkable test. VFINX and VOO are the same fund except one is a mutual fund and the other is an ETF as noted before. This is a vami chart showing the difference.

Chart 4. VFINX to VOO

As noted before, either mutual funds outperform ETFs or there is a problem I am missing. I'll ask Vanguard about this. Note: mutual funds are marked to NAV every close while ETFs are freely traded with arbitrage enforcement.

The excel spreadsheet for this post is available to anyone. Just ask.

Disclaimer: This blog is not investment advice, is for information purposes only, may be subject to change without notice, and while prepared with care, may be subject to omissions and errors.