FZROX vs. VTSAX: Which One Should You Invest In?

Someone asks:

Why would we choose VTI or VTSAX over FZROX for taxable brokerage account?

FZROX vs VTSAX: Fund Objective

FZROX is the Fidelity ZERO Total Stock Market Index Fund. The goal of this mutual fund is to track the total return of a broad range of U.S. stocks. That includes small, mid, to large-cap stocks included in the Fidelity U.S. Total Investable Market Index.

It was created by Fidelity Investments in 2018 and it is the first of its kind. The fund provides investors with a way to invest in the US stock market without paying any fees or commissions, while still getting access to dividends and capital gains.

VTSAX is one of the most popular index funds for investors. It tracks the performance of U.S stock market.

Vanguard Total Stock Market Index (VTSAX) was launched in 1992 by John C. Bogle, who is known as the father of index investing. It is considered one of the best investments because it covers almost all sectors of U.S stock market and provides low-cost exposure to stocks.

FZROX vs VTSAX: Expense Ratio

VTSAX charges 0.04% per year, while FZROX is a no-fee mutual fund. This means you don’t have to pay any fee to Fidelity for owning this specific fund.

When selecting an index fund, the expense ratio is critical. You want to keep your expense ratio as low as possible so that it does not reduce your return.

Even though FZROX doesn’t charge a fee, the expense ratio from VTSAX is considered low compared to its peers in the same category.

FZROX vs VTSAX: Top 10 Holdings

FZROX and VTSAX are two identical mutual funds that track the total U.S stock market. They have the same top 10 holdings but with different weights.

  • FZROX has 2631 holdings in its portfolio.
  • VTSAX has 4143 holdings in its portfolio.

Here’s VTSAX Top 10 Holdings

Apple Inc. AAPL 5.71%
Microsoft Corp. MSFT 5.21%
Amazon Inc. AMZN 2.97%
Alphabet Inc. Cl A GOOGL 1.80%
Tesla Inc. TSLA 1.75%
Meta Platforms Inc. FB 1.64%
Alphabet Inc. Cl C GOOG 1.61%
NVIDIA Corp. NVDA 1.44%
Berkshire Hathaway Inc. Cl B BRK.B 1.05%
UnitedHealth Group Inc. UNH 0.98%

VTSAX Sector Allocation

Technology 28.73%
Financials 16.16%
Consumer Services 12.89%
Industrials 11.70%
Health Care 11.66%
Consumer Goods 8.30%
Oil & Gas 2.72%
Utilities 2.40%
Basic Materials 2.07%
Non Classified Equity 1.80%

Data as of 12/31/2021

FZROX vs VTSAX: Dividend Yield

Vanguard Total Stock Market Index Fund (VTSAX) pays dividends to shareholders quarterly.

FZROX, on the other hand, distributes dividends annually. Once every December.

The dividend yield for VTSAX is 1.28%. The dividend yield for FZROX is 1.15%.

FZROX vs VTSAX: Annual Return

Let’s see how the Fidelity and Vanguard Total Stock Market Index Funds performed over the past five years.

Funds Fidelity® ZERO Total Market Index Fund Vanguard Total Stock Market Index Fund Admiral Shares
1 month +3.97% +3.82%
3 months +9.39% +9.16%
6 months +9.39% +9.09%
1 year +26.01% +25.71%
3 years +25.81% +25.77%
5 years +17.98%

Conclusion: Which is Better, FZROX or VTSAX?

This is difficult to say. Because the two index funds are so similar, we can’t say which is a better buy. However, there are a few factors that make FZROX look more attractive than VTSAX.

  1. There is no yearly expense fee with FZROX.
  2. Fidelity funds have no initial minimum investment, whereas VTSAX requires you to invest at least $3,000 in the fund.
  3. If you intend to invest in VTSAX through Fidelity, you will be charged $75 for the trade. It’s pointless to pay more when you can get the same thing for less.


David J:

FZROX because it’s cheaper. Always keep your expenses as low as possible with everything. Buying a Vanguard mutual fund for $75 at Fidelity is a waste of $75. Invest your money in FXKAX or FZROX.

David D:

FZROX is cheaper, and they keep adding assets into it (about 5bil in 2020, 8.8bil as of now). So it is better to have lower cost as it’s growing.

Joe M:

Is this a taxable account? FZROX isn’t portable, so if you needed to move to another brokerage, you’d have to cash it out and incur capital gains. Also, VTI has no ongoing capital gains distributions since it’s an ETF. None of this matters if you are dealing with a tax-sheltered account.

Robert A:

The FZROX fund seems like about the same thing. FZROX has zero fees. The asset managers are probably making their money off securities lending of the portfolios.

If this is the index exposure you want, they both look good to me. Still, I might lean toward VTI for the liquidity of being exchange-traded versus forward-priced and the ability to write covered calls against the position if you want a hedge or to generate additional income.

Sean M:

FSKAX tracks the Dow Jones U.S. Total Stock Market Index, whereas VTSAX tracks the CRSP US Total Market Index. Both track the market very closely, and both are low-cost, so I don’t expect investors will notice any meaningful difference between the two long-term. They’re very competitive with each other.

John D:

FZROX has approximately 1,000 fewer stocks than FSKAX and VTSAX. They are mostly small cap stocks that make up a very small portion of the VTSAX/FSKAX portfolios. The three funds’ returns will be very similar but not identical.

Edu F:

VTSAX is a total stock market index fund. You can find equivalent Fidelity funds like FZROX that have little to no fees and minimums.

Brian M:

VTI though the holdings turnover is small in FZROX.

I have VOO in my taxable and FXAIX in my Roth for that reason.

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Hi! I'm Diego, 38, and I currently reside in New York. I work as a financial analyst. I primarily focus on initiatives involving research and data analysis.

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