FZROX Vs FXAIX – Which Fidelity Fund Is For You?

Looking for your next investment? Do you want to find an asset class that you can buy and hold as part of your investment options? Let’s look at FZROX vs FXAIX that you may include in your diversified portfolio.

FZROX vs. FXAIX are mutual funds created by Fidelity Investments for long-term investors. Both funds invest in publicly traded US companies. And ever since they were created, they have continued to pay out dividends while appreciating in value at the same time.

Fidelity Investments is one of the leading brokerage and investment companies in the world. And their mutual funds are some of the most subscribed in the industry. 

FZROX and FXAIX are not the only mutual funds they have, as there are many others, but these two are some of their most popular creations for many investors. Each one contains an assortment of high-value growth stocks by publicly traded companies in different sectors of the US economy. An important point is that these are not unlisted stocks such as Subway or Hulu.

The level of diversification ensures that if one or a few stocks underperform, the overall value of investors’ funds will not be greatly affected by it. So if you are looking to invest for your future, make sure you digest the information provided in this FZROX vs FXAIX review to help you make a decision and which one to go for.

In the following sections, we do a detailed review of both funds.

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FZROX: Fidelity® ZERO Total Market Index Fund

FZROX or Fidelity Zero Total Market Index Fund is a mutual fund created and managed by Fidelity Investments. The aim of this fund is to track the returns of a wide range of stocks in the US stock market. By analyzing past performance on a stock by stock basis, the managers are able to invest in highly profitable asset classes that will yield dividends and appreciate in the long run. 

Most of the stocks you will find in FZROX are common stocks using an adjustable floated market-weighted index which reflects the performance of the equity market. This fund invests in at least 80% of common stocks in the US S&P 500, which is a class of the 500 most profitable publicly traded companies in the US.

By investing in appreciating assets, investors have their risks spread out across various sectors of the economy. So in the event that one sector experiences a downturn or a few stocks experience tremendous volatility, the general value of the fund is still protected from risks that will greatly impact it negatively.

Also, note that FZROX contains a combination of large, medium, and small-cap stocks too.

One of the standard practices of mutual fund managers is to invest in some of the most circulated and profitable shares in the market, and FZROX is no different. 

Here’s the table indicating the top ten holdings of FZROX representing 24.06% of total assets.

NamePercentage
Microsoft Corp.5.26%
Apple Inc. 4.97%
Amazon.com Inc.3.10%
Tesla Inc.1.91%
Alphabet Inc Class A1.88%
Alphabet Inc Class C1.77%
Meta Platforms Inc.1.63%
NVIDIA Corp.1.35%
Berkshire Hathaway Inc.1.12%
JPMorgan Chase & Co.1.07%

As you can see, FZROX’s top ten holdings are spread across different sectors like technology, consumer goods, finance, and retail. This fund is highly diversified.

FXAIX: Fidelity® 500 Index Fund

FXAIX or Fidelity 500 Index Fund is another fund created by Fidelity Investments, and it contains S&P 500 index stocks. The fund invests in at least 80% of common stocks in the index. Most of the earnings come from the dividend and value appreciation of the stocks in the fund. Another option is through the lending of securities to earn income. 

To select the right stocks to go for, the managers of FXAIX rely on statistical sampling. They evaluate each stock based on current trends, company profiles, and, most importantly, historical data to make their choice. Moreover, they do rely on the S&P to make their picks. In all, FXAIX has a stake in at least 80% of all the investable stocks in the S&P 500.

Based on historical performance, expert investors and fund managers agree that stocks in the S&P are great for retirement investments. This is because the stocks are valuable and largely stable. They are less prone to market volatility and market price swings.

In addition, the index is not based solely on a single industry, so the misfortunes of one industry will have minimal impact on the overall financial health of the fund. 

And so far, FXAIX has been doing quite well. Recently,  the fund had garnered investments across 510 different holdings worth $353 billion. It has also posted the following returns

  • 16.15% over the last ten years
  • 16.19% over the last five years
  • 20.37% over the last three years
  • 27.91% for last year

Since it was launched in 2011, it has continued to offer value to investors and holders who prefer long-term investment securities.

Here’s the table showing FXAIX’s top holdings representing 29.08% of its total value.

NamePercentage
Microsoft Corp.6.36%
Apple Inc.6.00%
Amazon.com Inc.3.75%
Tesla Inc.2.31%
Alphabet Inc. Class A2.27%
Alphabet Inc. Class C2.13%
Meta Platforms Inc. Class A1.97%
NVIDIA Corp.1.63%
Berkshire Hathaway Class B1.36%
JPMorgan Chase & Co.1.30%

FZROX Vs FXAIX: Key Differences

FZROX vs. FXAIX are both mutual funds issued by the same firm, and they are passively managed. 

Where FZROX tracks the total market index, FXAIX tracks stocks in the US S&P 500. That means FZROX trades in small-, medium- and big-cap stocks. On top of that, they trade in American, European, and Asian securities. 

FXAIX, on the other hand, only trades in the S&P 500 index. That means this fund is focused on large-cap stocks within the US. 

That means FZROX is more diversified and puts its eggs in more baskets compared to FXAIX. 

Another small difference we can see is that they attract different expense ratios. FZROX is a zero expense fund, so you pay no fees for it, while FXAIX attracts a fee of 0.02%, which is quite low.

FZROX Vs FXAIX: Composition Differences

Here’s the table showing the compositional differences between the two

CategoryFXAIXFZROX
TypeMutual FundMutual Fund
SegmentN/AN/A
IssuerFidelity InvestmentsFidelity Investments
Net Assets$353 billion$12.29 billion
Expense Ratio0.02%0.00%
ManagementPassivePassive
Dividend1.26%1.03%
Minimum investmentN/AN/A

This data shows that both mutual funds have similar characteristics and are very much alike.

FZROX Vs FXAIX: Performance Differences

Now let’s look at the performance data of FZROX vs FXAIX to see how they stack up against each other.

FZROX Performance And Returns:

PerformanceReturns
1-Month Return1.97%
3-Month Return0.18%
1-Year Return25.41%
3-Year Return20.29%
5-Year ReturnN/A
10-Year ReturnN/A

FXAIX Performance And Returns:

PerformanceReturns
1-Month Return7.00%
3-Month Return5.12%
1-Year Return42.89%
3-Year Return21.46%
5-Year Return18.91%
10-Year Return16.20%

Just as with their asset compositions, FZROX vs. FXAIX post similar returns for the same period with very little differences separating them.

FZROX Vs FXAIX: Fees

FZROX and FXAIX are low-cost funds, making them very attractive securities for long-term investors. FZROX is basically a zero-cost fund which means that you don’t pay a dime as expense fees. But as for FXAIX, you pay an expense ratio of 0.02%, which is also very low.

The expense fee charged on a fund is one information investors are critical about because these fees have an impact on earnings long term. While a 1% or 2% fee may not look like much in the short term, they accumulate in the future, which will reduce how much you get at the end of the maturity date. 

As for FZROX vs FXAIX, both funds are quite affordable.

FZROX Vs FXAIX : Frequently Asked Questions

Here are some of the frequently asked questions that can help you better understand FZROX vs. FXAIX.

Is FZROX The Same As FXAIX?

Both of these funds are mutual funds offering investors long-term benefits. FZROX is a Total Market Index Fund, while FXAIX is an S&P 500 fund. 

Is FZROX a Good Investment?

FZROX is a diversified investment. First, it is managed by experienced equity managers. Second, it is a zero-fee fund, so you don’t have to pay management fees on your investment. Lastly, the fund pays an average dividend yield of 1.03%. So it is ideal for long-term investments.

Is FZROX Better Than FXAIX?

That will depend on your investment habits. They are both mutual funds, where FXROZ invests in the total stock market and FXAIX invests in the S&P 500.

The only area that FZROX comes out on top is that holders do not pay an expense fee while holders of FXAIX pay a 0.02% fee. However, FXAIX has been around for much longer and is much easier to track based on historical data.

Does FZROX Pay Dividends?

Yes, FZROX pays dividends. The average dividend yield is 1.03%.

FZROX Vs FXAIX: Which Fidelity Fund Is For You?

Now that you have learned the ins and outs of these mutual funds, it is time to determine which one is aligned with your investment objectives. Which one will outperform the other and will provide your investment portfolio the income funds you need for your retirement plan or savings plan? 

As with all investment choices, determining which of these two fits the bill will depend on your financial status, capacity, and plans. Know first these factors so you may have an informed and educated decision on the investment fund you will devote your time to. The important aspect here is that either one of these funds will help you in the long run. So make sure to do the additional homework to invest wisely and effectively.

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Tim Thomas has positions in the stocks, ETFs or commodities mentioned.

This post was produced by Radical Fire and was syndicated by Timothy Thomas Limited.

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