By Dan Miller, WCI ContributorVanguard and Fidelity are two of the largest and most commonly used financial services companies. If you are looking at and comparing investment companies to use, it's likely that these two companies will be near the top of your list. But when comparing Vanguard vs. Fidelity, you'll probably want to ask which is better, and how should you choose between them?
Vanguard Overview
Vanguard was founded in 1975 by John C. Bogle, who pioneered the concept of the index fund to offer low-cost investing to the public. Headquartered in Malvern, Pennsylvania, Vanguard manages over $10 trillion in global assets (as of January 2025) and serves tens of millions of investors worldwide.
Vanguard offers a broad range of services, including mutual funds, Exchange Traded Funds (ETFs), retirement planning, financial advisory, and institutional asset management. Known for its conservative, long-term approach and commitment to low fees, Vanguard plays a central role in the global investment landscape.
Fidelity Overview
Fidelity Investments, founded in 1946 by Edward C. Johnson II, is a privately held financial services firm headquartered in Boston. As of the end of 2024, Fidelity manages approximately $5.9 trillion in assets under management and oversees $15.1 trillion in assets under administration, positioning it among the largest asset managers globally. Fidelity is a leading provider of 401(k) plans, managing employee benefit programs for many employers.
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Pros and Cons of Vanguard
Vanguard Pros
Low fees: Vanguard is known for having ultra-low expense ratios on its funds.
Strong reputation and track record: With decades of experience and trillions in assets under management, Vanguard is trusted for its conservative and long-term investment philosophy.
Long-term focus: Vanguard focuses on disciplined, long-term strategies rather than short-term speculation, which can appeal to retirement and wealth-building investors.
Vanguard Cons
Limited active trading tools: Vanguard’s trading platform is more focused on long-term investing and lacks some advanced features desired by active traders (e.g., real-time data, advanced charting).
No crypto: Investors looking for access to cryptocurrencies or high-risk speculative assets will not find them at Vanguard.
Pros and Cons of Fidelity
Fidelity Pros
Robust trading platform: Fidelity offers advanced trading tools like Active Trader Pro, real-time analytics, and detailed research.
Wide investment selection: Fidelity provides access to a broad range of investments, including stocks, bonds, mutual funds, ETFs, options, and more.
Zero-fee funds and low-cost ETFs: Fidelity was among the first to launch zero-expense-ratio index funds.
Fidelity Cons
Higher fees on some actively managed funds: While index funds are cheap, some actively managed mutual funds still carry higher expense ratios compared to Vanguard or ETFs.
Limited access to crypto and alternatives: While more flexible than Vanguard, Fidelity still offers limited exposure to cryptocurrencies and alternative assets compared to some other platforms.
How Is Vanguard Different from Fidelity?
Since they are both large financial services companies, Vanguard and Fidelity share a lot of similarities. However, there are a few key differences that you'll want to know about. Vanguard is known for promoting passive investing, while Fidelity has a stronger emphasis on active trading. Vanguard's trading tools and interface are more basic than Fidelity's, but Vanguard also generally has lower fees on its funds than corresponding funds from Fidelity.
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Fidelity vs. Vanguard Comparison
Here's a look at how Vanguard and Fidelity compare to each other:
Cost/Fees
Vanguard is known throughout the industry as having some of the lowest expense ratios on its funds. Fidelity does offer a limited number of funds with zero expense ratios, while the majority of the rest of its funds have higher expense ratios than their corresponding Vanguard funds. Vanguard offers free trading on its own ETFs and most other funds, while Fidelity offers commission-free trading on ETFs and stocks.
Performance
Both Fidelity and Vanguard offer excellent performance on their index funds, tracking the corresponding indices quite tightly. If you are a more active trader, Vanguard only offers a limited amount of active funds, since they are focused on index funds. Fidelity offers a wide spectrum of active funds, and the performance of these funds varies.
Security
Both firms have excellent reputations for security and follow strict standards for protecting client accounts. They both offer up to $500,000 of SIPC protections (including $250,000 cash) as well as additional insurance for added protection.
Customer Service and Digital Account Management/Technology
While Vanguard has made strides in updating its website, trading interface, and customer service, Fidelity still stands a step ahead, according to many investors. Fidelity's website and mobile app are generally considered more modern, easy-to-use, and feature-rich, and their customer service wait times are lower. Fidelity also offers Active Trader Pro, budgeting tools, and strong dashboards, while Vanguard does not have as robust a suite of trading tools since its focus is more on buy-and-hold investors.
529 Plan Fidelity vs. Vanguard
A 529 plan is primarily a tax-advantaged account used to save for higher education expenses. Because 529s are often used by parents to save for their children's education, these plans often have a longer time horizon than other types of investment accounts. With a longer-term focus, Vanguard may have lower fees.
However, keep in mind that one of the biggest reasons to choose a particular 529 plan is that your state may offer additional benefits or advantages for investing in their plan. For example, Ohio residents can deduct up to $4,000 per year per beneficiary from their Ohio taxable income for contributions to the Ohio 529 plan.
Fidelity vs. Vanguard Index Funds
Both Fidelity and Vanguard offer index funds, and using either firm can be a good option, depending on the fund you want to invest in and your overall investment goals. Fidelity ZERO funds have a 0% expense ratio, while other Fidelity funds might have higher ratios than Vanguard's funds, which are typically among the lowest in the industry. Some Vanguard index funds have a minimum amount required to invest, while most Fidelity funds have no minimums.
Is It Better to Invest with Vanguard or Fidelity?
There isn't one set answer about whether it's better to invest with Fidelity or Vanguard—instead, the answer will depend on your specific goals and financial situation. You'll want to consider factors like what type of trader you are, the expense ratios and fees on the funds that you're looking to invest in, and whether any account minimums might apply to you. You can also consult with trusted friends, family members, and advisors to see if they have any recommendations for you.
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How to Choose Between Vanguard and Fidelity?
Choosing between Fidelity and Vanguard will often be a matter of your preferred investing style and your overall financial goals. If you're a long-term buy-and-hold investor, Vanguard may be the better choice, while Fidelity could be a better option for more active traders. Fidelity also generally has no minimum account balance, which can be better for new investors.
Both Vanguard and Fidelity offer funds with minimal expense ratios. The Fidelity ZERO funds offer access to several top indices with a zero expense ratio. And while Vanguard does not currently offer any funds without expenses, they are known for having funds with extremely low expense ratios (often in the 0.03%-0.05% range).
Which Is a Better Choice for the WCI Investment Philosophy?
Although there are many ways to invest, Point No. 4 of the WCI investment philosophy says that buying and holding an asset allocation of index mutual funds is the best foundation for a portfolio. If you are a buy-and-hold investor, you might have a better experience (and lower fees) working with Vanguard. But between the two, you're most likely going to be fine with either brokerage company.
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