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FZROX vs FSKAX: Which Fidelity Fund Is Better?

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We Compare FZROX vs FSKAX:

Fidelity ZERO Total Market Index Fund (FZROX) vs Fidelity Total Market Index Fund (FSKAX)

Investors may find it difficult to choose between FZROX vs FSKAX.  They are both great total market funds.

I’ll help break down their differences.

FZROX vs FSKAX Graphic

 

FZROX vs FSKAX

The primary difference between FZROX and FSKAX is the index they track.  FZROX tracks the U.S. Total Investable Market Index, while FSKAX tracks 80% of the Dow Jones U.S. Total Stock Market Index.

Both are Fidelity funds.

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

Another significant difference is the number of holdings in each fund.

FZROX holds 2,631 stocks

FSKAX holds 3,875 stocks

This means FSKAX provides more diversification compared to FZROX.

FZROX

  • Fund Inception: 2018
  • Tracks U.S. Total Investable Market Index
  • No Minimum Investment
  • Expense Ratio: 0%
  • Number Of Stocks: 2631

FSKAX

  • Fund Inception: 1997
  • Tracks 80% of the Dow Jones US Total Stock Market Index
  • Expense Ratio: 0.015%
  • Number Of Stocks: 3875
  • Similar Funds (FXAIX)

 

FZROX vs FSKAX Performance

Fidelity’s FZROX and FSKAX have had almost identical performance returns over the last 3 years.  FZROX has had slightly better returns but only by 0.16% annually.

FZROX vs FSKAX Performance Returns

We can only compare FZROX and FSKAX‘s performance over the last 3 years since FZROX is still a new fund.  FZROX’s inception date was in 2018.

FSKAX has had strong performance returns over the last 10 years, with over 14% annual returns.  This is in line with the bull market of the previous decade.

Here is how FZROX and FSKAX performance compares on a chart:

FZROX vs FSKAX Performance Growth

Their performance would overlap; however, FZROX’s inception date was in 2018, giving it a late start.

 

FZROX and FSKAX Similarities

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

Their expense ratio is almost identical (0% vs 0.015%).  The difference can be considered negligible at that low of an expense ratio.

Example:

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

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

A difference of $849.10.

Similarities between FZROX and FSKAX:

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

 

FZROX and FSKAX Differences

The main difference between FZROX and FSKAX is their holdings.  FZROX holds 2,631 companies, while FSKAX holds 3,875 companies.

FZROX provides less diversification compared to FSKAX.

This also means you can expect slightly more volatility from FZROX compared to FSKAX.

Another difference is their net assets.  FSKAX has $71 billion in net assets vs $12 billion with FZROX.

This is expected since FZROX only opened in 2018.

FZROX vs FSKAX Comparison Chart

There is no minimum investment for both FSKAX and FZROX.

Lastly, FSKAX has a slightly higher expense ratio than FZROX (0.015% vs 0%).

Differences between FZROX and FSKAX:

  • Expense Ratio (0% vs 0.015%)
  • Number Of Holdings
  • Net Assets

 

FZROX Overview

  • Fund Inception: 2018
  • Expense Ratio: 0%
  • Number Of Stocks: 2,631
  • Top 10 Holdings: 24%
  • Yield 1.12%

THE Fidelity ZERO Total Market Index Fund (FZROX) is 1 of 4 new Fidelity funds with a zero expense ratio.  These are the only index funds with a zero expense ratio on the market.

The other 3 Fidelity funds with a zero expense ratio are:

  1. (FNILX) Fidelity ZERO Large Cap Index Fund
  2. (FZIPX) Fidelity ZERO Extended Market Index Fund
  3. (FZILX) Fidelity ZERO International Index Fund

These zero expense ratio funds are likely a result of market pressures to lower investment costs and compete with other big brokerages with low-cost funds like Vanguard.

Another key aspect of FZROX is that it only pays a dividend once a year in December.  This is a big difference compared to most other funds that pay a dividend quarterly.

FZROX only pays a dividend once a year in December

This might be important for someone who is in retirement and depends on dividend income for yearly expenses.

 

FZROX Performance

Fidelity’s FZROX has averaged 19% annually over the last 3 years.  However, the fund doesn’t have a 5 or 10-year performance history since its inception was in 2018.

Here is how $10,000 would have grown with FZROX over the last 3 years:

FZROX Performance

Overall, this is a great return, especially considering the zero expense ratio.  Therefore, as an investor, you keep 100% of the performance returns.

 

FZROX Top 10 Holdings

FZROX is largely made up of Microsoft, Apple, Amazon, Alphabet, and Tesla and provides exposure to over 2000 stocks.

FZROX Top 10 Holdings

Fidelity’s FZROX provides diversification and is less volatile compared to other funds with fewer holdings.

 

FSKAX Profile

  • Fund Inception: 1997
  • Expense Ratio: 0.015%
  • Number Of Stocks: 3,875
  • No Minimum Investment
  • Fidelity Fund
  • Similar Funds (FZROX)

Fidelity Total Market Index Fund (FSKAX) is a Fidelity broad market fund that mirrors the Dow Jones U.S. Total Stock market and holds over 3,000 stocks.

It is a consistent fund for the multi-cap category and offers greater diversity than the typical large-cap fund.

Like FZROX, FSKAX offers investors an extremely low expense ratio of 0.015%.

FSKAX return is nearly the same as FZROX over the last 10 years.  The broad diversity of its holdings helps with its steady returns.

In addition, the fund outperforms its index and the large-blend classification on a three- and five-year basis.

 

FSKAX Performance

FSKAX Performance

 

FSKAX Holdings

FSKAX Top 10 Holdings

Fidelity’s FSKAX is largely made up of Apple, Microsoft, Google, Amazon, and Tesla and provides exposure to over 3500 stocks.

 

Which Is Better FZROX or FSKAX?

FZROX is better in terms of costs because it has a zero percent expense ratio.  In addition, it is one of four funds offered by Fidelity with zero fees.

FSKAX provides investors with more diversification and less volatility because of its 3,875 holdings.

That said, both FZROX and FSKAX are great funds.

The answer to which fund is better will depend on your investment goals and prioritizing cost and diversification.

To make it easier to decide, I’ll lay out the advantages of both of them:

FZROX Advantages:

  • No Cost
  • Slightly Better Short-Term Performance

FSKAX Advantages:

  • Strong Performance History
  • Low Expense Ratio
  • More Diversification
  • More Liquidity

If having the lowest cost option is your primary goal, FZROX is the best option with its zero cost feature.

If having a solid history of performance returns and more liquidity is more important, then FSKAX is the better option due to its inception date of 1997 and net assets of $71 billion.

That said, there is no reason why you can consider both for your investment portfolio if you don’t want to choose only one.

Related Posts:

 

FSKAX or FZROX for Financial Independence

Both FSKAX and FZROX can get you to Financial Independence Retire Early (FIRE).  They both have a similar return on investment and have rock bottom expense ratios (0.015% & 0%).

So, either option is an excellent investment for financial independence.

If you are new to Fidelity, you might be interested in this article about picking the best Fidelity Core Position.

After keeping fees to a minimum, you can increase your savings rate and prioritize your investments.

Then, you will be well on your way to Financial Independence and Early Retirement!

JL Collins FIRE Calculator

Calculate Your FI Number With My Free FIRE Calculator

 

My Winner: BOTH

Both are winners because you can expect them to have similar performance, diversification, and costs.

There are slight differences, as highlighted above.  However, over the long term, these funds should reward investors.

Again, both funds have a very low expense ratio which means you keep more money in your portfolio.

Lastly, both FZROX and FSKAX are excellent Fidelity funds and make for a great addition to consider.  Please consider your investment goals when making your decision.

 


Disclaimer
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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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