FSKAX vs FZROX are two popular index funds that are offered by Fidelity Investments . These low-cost mutual funds provide investors with exposure to the US stock market . While both funds share similarities as index funds there are some key differences to consider when choosing between FSKAX and FZROX . Let’s explore the benefits of each fund .
FZROX: Zero Total Market Index Fund
FZROX stands for the Zero Total Market Index Fund . It is a newer fund that was introduced by Fidelity Investments in 2018 . It offers investors the opportunity to earn a return on a wide range of US stocks . The fund’s strategy involves investing at least 80% of its assets in common stocks of publicly traded US companies and aims to reflect the performance of the US equity market .
In order construct the portfolio FZROX’s managers use statistical sampling based on factors like industry exposure, dividend yields, capitalization, price-book value and earnings growth . FZROX stands out for its zero expense ratio which means that investors pay no fees for holding this fund .
FSKAX: Fidelity Total Market Index Fund
FSKAX is short for the Fidelity Total Market Index Fund which is another mutual fund that is offered by Fidelity Investments . This fund is designed to provide exposure to a broad range of US-based stocks of publicly traded companies . Around 80% of the fund’s assets are invested in common stocks that are traded on the US Dow Jones index .
An investor in FSKAX can expect the fund’s performance to be influenced by a diverse range of stocks in its portfolio rather than a single or few stocks . FSKAX has an expense ratio of 0 .02% which is considered one of the best among Total US Stock Market Index funds .
Key Differences and Considerations
While FSKAX and FZROX share many similarities there are some significant differences to consider . Firstly as a holder of FZROX you aren’t able to transfer your investments out of Fidelity without selling your holdings which may incur capital gains tax . However if you hold FZROX in a tax-deferred IRA this does not apply to you .
Another significant difference is in the expense ratio . FSKAX as the older fund has an expense ratio of 0 .02% which is still relatively low compared to other funds . In contrast FZROX has an expense ratio of 0 .00% which means investors pay no fees for holding this fund .
Over a 30-year period FSKAX’s expense ratio would amount to roughly 0 .69% of the total value of your portfolio . On the other hand FZROX’s zero-fee structure helps attract investors to Fidelity’s brokerage services operating under a loss-leader model .
Final Thoughts
FSKAX and FZROX are both low-cost index funds Fidelity Investments offers which are designed to provide investors with exposure to the US stock market . When deciding between FSKAX vs FZROX carefully consider factors such as your investment goals, preferences and the impact of fees on your long-term returns .
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