Fidelity Zero Index Funds: How Much To Start Investing?

Fidelity ZERO funds are a set of four index funds with no expense ratios and no minimum investment requirements. The funds are:

- Fidelity ZERO Large Cap Index Fund (FNILX)

- Fidelity ZERO Total Market Index Fund (FZROX)

- Fidelity ZERO International Index Fund (FZILX)

- Fidelity ZERO Extended Market Index Fund (FZIPX)

These funds track proprietary indexes created by Fidelity, which are similar to but not the same as popular indexes like the S&P 500. While the ZERO funds have no fees, they do pass on transaction costs to investors.

Fidelity ZERO Large Cap Index Fund (FNILX)

The Fidelity ZERO Large Cap Index Fund (FNILX) is one of four zero-fee funds offered by Fidelity. These funds are designed to be managed at no cost to the investor, with no minimum investment required.

FNILX is designed to replicate the most popular stock index funds on the market, such as the S&P 500 index funds. It tracks the Fidelity U.S. Large Cap Index, investing in roughly 500 of the largest U.S. companies. The fund has a 0% expense ratio, meaning it is free to invest in, and there are no minimum investment requirements.

FNILX has a short operating history but has managed to perform roughly in line with the S&P 500 since its launch. As of September 30, 2024, the fund had total assets of 11.2 billion USD, with a 1-Day Return of +0.44% as of November 1, 2024.

FNILX is well-suited for beginning investors who plan to invest in a tax-advantaged retirement account. It offers a straightforward way to invest in a broad range of large-capitalization U.S. companies without incurring fund fees.

Fidelity ZERO Total Market Index Fund (FZROX)

The Fidelity ZERO Total Market Index Fund (FZROX) is one of four Fidelity zero-fee funds, which are unique in that they are free to invest in and have no minimum investment amount. This means that investors can buy and hold without paying any expenses.

FZROX is a total market index fund, which means it invests in virtually every single company listed on US markets, with a few exceptions. In this case, the fund excludes companies with a market cap of less than $75 million and a six-month trading volume of less than $25 million. As a result, the fund has about 2,500 holdings, with large-cap stocks making up the majority of its portfolio. The 10 largest stocks make up 18% of the portfolio.

FZROX is most comparable to a Russell 3000 index fund. When you buy this fund, you own a piece of virtually every US-listed stock in proportion to its worth as a percentage of all US-listed stocks. This makes FZROX the closest thing to truly passive stock investing.

FZROX has a sizable cost advantage over its competitors, priced within the least expensive fee quintile among peers. It also has a Morningstar Medalist Rating of Gold as of 30 September 2024. As of 29 October 2024, the total assets of the fund were valued at 23.8 billion USD, with a 1-day return of +0.15%.

FZROX is a good option for beginning investors who plan to invest in a tax-advantaged retirement account.

Fidelity ZERO International Index Fund (FZILX)

The Fidelity ZERO International Index Fund (FZILX) is one of four Fidelity index funds that are available with a 0% expense ratio and no minimum investment. This means that investors can buy and hold FZILX without paying any expenses or having to meet a minimum investment threshold.

FZILX is designed to invest in the vast majority of the most valuable foreign developed and emerging stocks listed on international exchanges. The fund has over 2,300 holdings, and its top 10 holdings comprise 11.2% of its portfolio. As of November 1, 2024, FZILX had total assets of 4.5 billion USD.

FZILX is comparable to funds that track the MSCI ACWI Ex USA Index, such as the Fidelity Total International Index (FTIHX). However, FZILX holds substantially fewer stocks than FTIHX, which has nearly 4,700 holdings. In terms of performance, FZILX modestly outperformed FTIHX in the fourth quarter of 2018, the only full quarter in which both funds were in operation.

FZILX is best suited for beginning investors who plan to invest in a tax-advantaged retirement account. While the fund offers the benefits of a $0 minimum investment and no expenses, it may not be ideal for investors with larger sums to invest or those who use taxable accounts.

Fidelity ZERO Extended Market Index Fund (FZIPX)

The Fidelity ZERO Extended Market Index Fund (FZIPX) is one of four zero-fee funds offered by Fidelity. This means that there is no minimum investment required to invest in FZIPX, and it has a 0% expense ratio. The fund is designed to be paired with the Fidelity ZERO Large Cap Index Fund, as it holds stocks that are too small to be included in the large-cap fund. It invests in around 2,000 mid- to small-capitalization US companies, which, when added to the stocks in the large-cap fund, provide investors with holdings in the Fidelity ZERO Total Market Index Fund.

The FZIPX is an alternative to funds based on the S&P Completion Index, which includes around 3,000 stocks that are not in the S&P 500. The fund holds about 500 fewer stocks than the S&P Completion Index, but the market cap weighting means that more money is invested in larger companies. As a result, the FZIPX has about 2,500 holdings.

The FZIPX has a net expense ratio of 0.00% and a 52-week range of 10.10-12.40. It has a 52-week average return of 17.80% and total net assets of $1.384 billion.

No minimum investment

Fidelity offers a range of zero-fee funds with no minimum investment requirements. These include:

• Fidelity ZERO Large Cap Index Fund (FNILX): This fund seeks to provide investment results that correspond to the total return of stocks of large-capitalization U.S. companies. It normally invests at least 80% of its assets in common stocks of large-cap companies included in the Fidelity U.S. Large Cap Index, which is a float-adjusted market capitalization-weighted index. The fund has returned 10.56% over the past year, 9.70% over the past three years, and 10.99% over the past five years.
• Fidelity ZERO Total Market Index Fund (FZROX): This fund invests in every single company listed on U.S. markets, excluding companies with a market cap of less than $75 million and six-month trading volume of less than $25 million. It has about 2,500 holdings, with large-cap stocks making up the majority of its portfolio.
• Fidelity ZERO Extended Market Index Fund (FZIPX): This fund is meant to be paired with the Fidelity ZERO Large Cap Index Fund. It invests in the 2,000 stocks that are too small to be included in the large-cap fund, providing investors with exposure to smaller companies.
• Fidelity ZERO International Index Fund (FZILX): This fund invests in the majority of the most valuable companies listed on international exchanges, allowing investors to own a piece of U.S. and foreign stocks. It has over 2,300 holdings and is designed to produce returns similar to those of funds that track the MSCI ACWI Ex USA Index.

Fidelity's zero-fee funds are ideal for beginning investors who want to start investing with small amounts of money. They offer a low-cost way to gain exposure to a diversified portfolio of stocks across different sectors and industries. However, it's important to note that these funds may not always generate returns that exactly match the indexes they track.

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