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FZIPX vs FSMAX: Which Extended Market Fund Is Best?

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In this article, we will explore the difference between FZIPX vs FSMAX.

Choosing between Fidelity Zero Extended Market Index (FZIPX) and Fidelity Spartan Extended Market Index (FSMAX) can be difficult.

Fidelity Zero Extended Market Index (FZIPX) is a popular fund because of its zero percent expense ratio.  The fund also holds over 2,000 stocks.

Fidelity Spartan Extended Market Index (FSMAX) holds over 3,000 stocks and has a low expense ratio of 0.035%.

Although the funds seek to replicate the investment return of stocks of mid-to small-capitalization U.S. companies, they follow different market indexes.

FZIPX tracks the Fidelity U.S. Extended Investable Market Index, while FSMAX tracks the Dow Jones U.S. Completion Total Stock Market Index.

This comparison will make it easy to decide between FZIPX vs FSMAX.

FZIPX vs FSMAX Graphic

 

FZIPX vs FSMAX

The primary difference between FZIPX and FSMAX is their number of holdings.  FZIPX holds 2115 stocks, while FSMAX holds 3650 stocks.

They also track different indexes.  FZIPX tracks the Fidelity U.S. Extended Investable Market Index, while FSMAX tracks the Dow Jones U.S. Completion Total Stock Market Index.

Both funds are low-cost Fidelity funds.

Fidelity made major headlines when they announced FZIPX would not have any fees or expense ratio attached to the fund.

As mentioned, a significant difference is the number of holdings in each fund.

FZIPX holds 2115 stocks

FSMAX holds 3650 stocks

This means FSMAX has more diversification than FZIPX.

FZIPX

  • Tracks the Fidelity U.S. Extended Investable Market Index
  • No Minimum Investment
  • Expense Ratio: 0%
  • Number Of Stocks: 2115
  • Similar Fund (FZROX)

FSMAX

  • Tracks the Dow Jones U.S. Completion Total Stock Market Index
  • No Minimum Investment
  • Expense Ratio: 0.035%
  • Number Of Stocks: 3650

 

FZIPX vs FSMAX Performance

FZIPX and FSMAX have had similar performance returns over the last 3 years.  FSMAX has had slightly better returns but only by 0.59% annually.

FSMAX vs FZIPX Performance

We can only compare FZIPX and FSMAX’s performance over the last 3 years since FZIPX is still a new fund.  In addition, FZIPX’s inception date was in 2018.

FSMAX has had strong performance returns over the last 10 years, with over 12% annual returns.  This is in line with the performance of the S&P 500.

 

FSMAX and FZIPX Similarities

Although FSMAX and FZIPX are not the same funds, they have similarities.  They are both very low-cost index funds.

Their expense ratio is almost identical (0% vs 0.035%).  The difference can be considered negligible at that low of an expense ratio.

Example:

Investing $10,000 into FZIPX and letting it grow for 30 years at a 7% return would result in $76,122.55.

Investing $10,000 into FSMAX and allowing it to grow for 30 years at a 7% return would result in $75,273.45.

A difference of $849.10.

Similarities between FZIPX and FSMAX:

  • Low-Cost Index Funds
  • Moderate – Aggressive Funds (Risk Level 4)
  • Invests Mainly In Large U.S Companies

 

FZIPX Description

In 2018, Fidelity released four Zero Extended market index funds.  FZIPX was one of them.

FZIPX seeks to provide investment results that correspond to the total return of stocks of mid-to-small-capitalization U.S. companies.

The fund typically invests at least 80% of assets in common stocks included in the Fidelity U.S. Extended Investable Market Index, a float-adjusted market capitalization-weighted index designed to reflect the performance of U.S. mid-and small-cap stocks.

Over the past three years, FZIPX has returned performance gains of 12.84% annually.

It holds over 2115 stocks and has net assets of $1.3 billion.

 

FZIPX Performance

This is a float-adjusted market capitalization-weighted index designed to reflect the performance of U.S. mid-and small-cap stocks.

FZIPX Performance

The fund has returned 2.67% over the past year and 12.84% over the past three years.  The best part of this fund is its zero expense ratio rate per year.

Investors can invest knowing there are zero fees.

 

FZIPX Holdings

FZIPX comprises Snowflake, Airbnb, Palantir, Molina Healthcare, and Diamondback Energy and provides exposure to over 2000 stocks.

FZIPX Top Holdings

Fidelity’s FZIPX provides less diversification than FSMAX because it holds fewer holdings.  This will likely make FZIPX more volatile compared to FSMAX.

FZIPX has more volatility and less diversification

 

FSMAX Description

Fidelity Spartan Extended Market Index (FSMAX) seeks to provide investment results that correspond to the total return of stocks of mid-to-small-capitalization United States companies.

The fund typically invests at least 80% of assets in common stocks included in the Dow Jones U.S. Completion Total Stock Market Index, which represents the performance of stocks of mid-to-small-capitalization U.S. companies.

In other words, FSMAX tracks the Dow Jones U.S. Completion Total Stock Market Index.

FSMAX has over 3650 Holdings.

 

FSMAX Performance

Fidelity benchmarks this fund to the Dow Jones U.S. Completion Total Stock Market Index, which represents domestic stocks outside the S&P 500 index, also excluding bulletin-board stocks.

This means that the fund targets all companies in the market aside from the 500 large companies in the U.S. market.

In the last 5 years, it has surpassed its Morningstar Mid-Cap Blend category average.

Fidelity’s FSMAX has a low expense ratio which is a factor in its performance.

FSMAX Performance

The fund has returned -6.58% over the past year, 13.43% over the past three years, 11.85% over the past five years, and 12.45% over the past decade.

 

FSMAX Holdings

FSMAX is largely made up of Blackstone, Snowflake, Airbnb, Lululemon, and Uber and provides exposure to over 3000 stocks.

FSMAX Top Holdings

 

FZIPX vs FSMAX: Comparison

A significant difference between FZIPX and FSMAX is how they are categorized.  FZIPX is a Mid-Cap Blend fund, while FSMAX is a Mid-Cap Growth fund.

The inclusion of more growth stocks in FSMAX is why FSMAX has had better performance returns over the last 3 years.

Here is a comparison of FZIPX and FSMAX:

FZIPX vs FSMAX Comparison Chart

 

FZIPX vs FSMAX: Asset Allocation

A look at the FZIPX asset allocation gives a rundown of the amount of fund (percentage) invested by companies as well as the major markets invested.

FZIPX

FZIPX Asset Allocation

We will also consider the Regional and Currency diversification % of FZIPX Investment Holdings.

Regional Diversification

FZIPX Regional Diversification

Major Market Sectors

FZIPX Sectors

FSMAX

FSMAX Asset Allocation

Regional Diversification

FSMAX Regional Diversification

Major Market Sectors

FSMAX Sectors

Both FZIPX and FSMAX are heavily tech-weighted.

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FZIPX vs FSMAX: Cost

Fidelity Extended Market Index (FSMAX) is more expensive with an expense ratio of 0.035%.  In comparison, Fidelity Zero Extended Market Index (FZIPX) is less costly, with a 0% expense ratio.

This difference can be a deciding factor for investors who seek the lowest expense ratios.  However, this difference will likely be negligible over the long term.

Winner: BOTH

 

FZIPX vs FSMAX Which Fidelity Mutual Fund Is Better?

Both FSMAX and FZIPX are Mutual Funds categorized as US Stock Mid Cap Funds.  They both have their advantages to investors.

FZIPX specifically offers investors broad-based exposure to a particular type of mid-and small-cap stocks, those that lack the requirements for popular large-cap indices.

This requirement is a certain market capitalization.

On the other hand, to get full exposure to the U.S. stock market, investing only in the S&P 500 is not enough, and this is where FSMAX comes in.

FSMAX includes a few big names not in the S&P 500 index alongside smaller domestic stocks.

That explains why FSMAX has more assets under management than the FZIPX.

FSMAX also fits more into the growth fund description.

If growth and broad market exposure are part of your criteria for choosing funds, then FSMAX is more suitable.

However, the benefit of running an investment portfolio on a zero-fee is attractive.

FZIPX has a 0% expense ratio against 0.035% for FSMAX, making it attractive to investors looking for the lowest cost options.

In addition to FZIPX’s lack of expenses, it also has a turnover ratio of 36%.  This turnover ratio implies that most of the stocks in the fund graduate to large-cap stocks with time.

When that happens, you won’t incur any turnover costs.

Therefore, FZIPX is appealing for its cost advantages.

Now’s the perfect time to make a decision; FZIPX or FSMAX.

If you choose FSMAX, you get a broader portfolio (which can boost returns) at a low cost of 0.035%.

If you go for FZIPX, you’re saving costs which can boost your ROI but with a less-broad portfolio.

The two funds seem to have the same risk level, so you can choose which best suits your preferences.

 


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This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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