If you want to invest on the Fidelity platform, the FZROX vs FXAIX comparison is a question that comes to the mind of almost every new and experienced investor. FZROX, i.e., Fidelity ZERO Total Market Index Fund, is a zero-fee total market fund that fully represents the US stock market, while FXAIX, i.e., Fidelity 500 Index Fund, tracks only the S&P 500 Index. Both funds are among Fidelity’s most popular mutual funds, but understanding the differences between them can make your investment decision a lot easier. In this article, we will take a detailed look at important factors like expense ratios, returns, holdings, risk, and dividend yield.
What is FZROX? Introduction to Fidelity ZERO Total Market Index Fund
FZROX or Fidelity ZERO Total Market Index Fund is a mutual fund that tracks the Fidelity U.S. Total Investable Market Index. This fund provides a broad representation of the U.S. stock market, including large-cap, mid-cap, and small-cap companies. The fund holds approximately 2,689 different stocks, giving it broad diversification. Its biggest advantage is its 0.00% expense ratio, meaning there are no annual fees on your investment. This fund is perfect for investors who want exposure to the entire U.S. market from a single fund.
Key Features of FZROX
FZROX has an expense ratio of 0.00%, making it one of the cheapest index funds on the market. Its top holdings include NVIDIA at about 6.94%, Apple at about 5.70%, Microsoft at about 4.33%, Amazon at about 3.71%, and Alphabet at about 3.21%. The fund’s dividend yield is around 0.92% to 0.93%. Morningstar has given it a Gold Medalist Rating, reflecting its quality. There is no minimum investment requirement for this fund.
What is FXAIX? Introduction to Fidelity 500 Index Fund
FXAIX or Fidelity 500 Index Fund is a mutual fund that tracks the S&P 500 Index. The S&P 500 consists of the 500 largest companies in the United States, selected by market capitalization. FXAIX has an expense ratio of just 0.015%, which is much lower than the industry average. The fund has been in the market for over 15 years and has approximately $828 billion in assets under management. FXAIX is perfect for investors who want to invest only in the largest and strongest companies in the United States.
Key Features of FXAIX
FXAIX has an expense ratio of 0.015%. Its dividend yield is approximately 1.04%, which is higher than FZROX. The fund’s top holdings are similar to FZROX, as large companies in the S&P 500 also dominate the total market index. FXAIX has an annual turnover of approximately 3%, and there is no minimum investment requirement either. The fund’s long history and large assets make it a very reliable choice.
FZROX vs FXAIX Detailed Comparison
Expense Ratio Difference
The Expense ratio is the annual fee that the fund company charges on your investment. FZROX has a completely zero expense ratio of 0.00%, while FXAIX has an expense ratio of 0.015%. In practice, FXAIX charges only $1.50 per year on a $10,000 investment. This dissimilarity is very small and does not make a big difference in the long run. However, if you want to avoid all possible fees in principle, FZROX’s zero-fee model is the clear winner.
Returns and Performance Comparison
According to data from the past five years, FXAIX has given an annual return of about 13.05%, while FZROX has given an annual return of about 12.16%. The main reason for this dissimilarity is that large companies in the S&P 500 have performed better than mid- and small-cap companies in recent years. However, in the early months of 2026, FZROX has surpassed FXAIX, indicating that the performance of both funds can diverge over different market periods. The interdependence between the two funds is around 0.99 to 1.00, demonstrating that they move roughly in tandem.
Holdings and Asset Allocation
Here comes the most important difference between the two funds. FZROX holds around 2,689 different stocks, spanning large-cap, mid-cap, and small-cap companies of all sizes. In parallel, FXAIX is limited to around 500 of the largest companies in the S&P 500. In this sense, FZROX provides broader diversification and exposure to different segments of the market. However, in practice, the top holdings in FZROX are also large companies, as it is a market capitalization-weighted fund.
Risk and Volatility
The instability of both funds is approximately the same. The volatility of FZROX is around 4.24%, and that of FXAIX is around 4.21%. The Sharpe Ratio of both is also almost the same, which shows their resemblance in terms of risk-adjusted returns. The maximum drawdown of FZROX has been around 34.96%, while that of FXAIX is around 33.79%. This slight difference is due to the presence of small-cap stocks in FZROX, which are usually more impacted in market declines. Overall, there is no dissimilarity between the two funds in terms of risk.
Dividend Yield
The dividend yield of FXAIX is around 1.04%, which is higher than that of FZROX, which is around 0.92%. This is because large companies in the S&P 500 usually pay high dividends, while the small-cap companies included in FZROX often do not pay dividends or pay very low dividends. If you prefer dividend income, FXAIX is slightly better in this consideration.
Which fund should you choose?
If you want broad asset allocation across the entire U.S. market, want exposure to small and mid-cap companies, and want to invest at absolutely zero fees, then FZROX is a better choice. This fund is pondered particularly good for IRA accounts where you are looking for long-term growth. On the other hand, if you want to focus only on the largest and most stable companies in the U.S., dividend yield is important to you, and you prefer a proven fund with a long history, then FXAIX is better. Keep in mind that there is no important advantage to holding the two funds together, as the correlation between them is around 1.00, and you will essentially be repeating the same exposure.
Is it wise to hold both FZROX and FXAIX together?
Short answer: No. There is so much coincidence between FZROX and FXAIX that holding the two together doesn’t really enlarge your portfolio. FZROX already holds all of the S&P 500 companies, plus hundreds of other mid- and small-cap companies. If you want diversification, adding an international index fund like FZILX or a bond fund alongside FZROX would be a more effective strategy.
Final Words
The decision between FZROX vs FXAIX ultimately comes down to your investment preferences. Both funds are among Fidelity’s best products, and both provide broad market publicity at very low fees. If you want complete market coverage and zero fees, choose FZROX. If you want the strong, proven performance of the S&P 500 and a slightly higher dividend yield, FXAIX would be better. In either case, you will be investing in a high-quality, low-cost index fund that can be an excellent source of long-term wealth creation. Register to consider your financial situation, goals, and risk tolerance before making any investment decisions, and seek advice from a competent financial advisor if necessary.
FAQs:
Q: What is the main difference between FZROX and FXAIX?
FZROX is a total market index fund that holds roughly 2689 stocks and represents the entire U.S. market. FXAIX tracks only the 500 largest companies in the S&P 500. FZROX has an expense ratio of 0.00%, and FXAIX has an expense ratio of 0.015%.
Q: Is FZROX really completely free?
Yes, FZROX has an expense ratio of 0.00%, which means that Fidelity does not charge an annual management fee on this fund. It is part of Fidelity’s ZERO Funds series, which is specifically designed with zero fees. However, this fund is only obtainable on Fidelity’s own platform.
Q: Which fund gives better returns over the long term?
FXAIX has given slightly better returns over the past five years as large-cap stocks have outperformed. However, when small- and mid-cap stocks perform well, FZROX can outperform. The two are expected to perform very closely over the long term.
Q: Should I invest in both FZROX and FXAIX?
This is generally not recommended as the association between the two funds is around 1.00. FZROX already covers all companies in the S&P 500, so keeping FXAIX separate does not add much to the diversification.
Q: Is FZROX only available on Fidelity or on other brokers as well?
FZROX is only available on Fidelity’s own platform. You cannot buy it at Schwab, Vanguard, or any other brokerage. Conversely, FXAIX may be available on some other platforms as well.
Q: Which fund is better for an IRA account?
Many experts prefer FZROX for an IRA account because it has a zero expense ratio and provides broad market exposure. In a retirement account where long-term growth is the goal, the broad diversification and zero fees combine to provide a strong advantage.
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