Free, we all love this word. Imagine if you can buy Index funds & with no minimums\ no fees. Now with through Fidelity you can. But are these funds to good be true? let’s take a look at 2 Funds – the zero total market index fund & the fidelity zero International index fund.
Fidelity ZERO SM Total Market Index Fund
(FZROX)
Features of this fund:
• No Transaction Fee
• No min deposit
• Fund Inception 8/2/2018
Average Annual Returns
YTD (Daily) *
• +2.73%
1 Yr +31.15%
• 3 Yrs —
• 5 Yrs —
• Life +11.05%
12 Month Low-High
• $8.58 – $11.37 *
Fidelity ZERO International Index Fund
(FZILX)
This fund created in aug 2018. This Fund will give you exposure to the US market as whole.
Features of this fund:
• No Transaction Fee
• No min deposit
• Fund Inception 8/2/2018
Average Annual Returns
YTD (Daily)**
• +1.06%
1 Yr +21.67%
• 3 Yrs —
• 5 Yrs —
• Life +5.18%
12 Month Low-High
• $8.66 – $10.46**
So those are the 2 zero index funds from Fidelity. A 3 fund portfolio is not complete without a bond index fund. Unfortunately, Fidelity is not offering a zero bond fund, but they do have a low cost fund – let’s have a look at it.
Fidelity U. S. Bond Index Fund (FXNAX)
Features of this fund:
• Annual Exp Ratio of 0.025% (down from 0.045%)
• No min deposit
• Fund Inception 8/2/2018
Average Annual Returns
YTD (Daily) ***
• +1.00%
1 Yr +8.48%
• 3 Yrs +3.94%
• 5 Yrs +2.99%
• 10 Yrs +3.67% (note: during a bull market Ave returns on bond funds typically lag behind stock funds)
12 Month Low-High
$11.25 – $12.10***
1st The Cons
Now that we’ve had a good look at these funds, what’s the verdict? Are the zero funds a scam? Not at all. But here’s the problem. If you are thinking of moving from Schwab or Vanguard to take advantage of these 2 funds – don’t, it’s not worth the time or effort. Both of Schwab & Vanguard already offer low exp ratio funds. Not to mention if you do decide to switch brokerages & you are using a taxable account, taxes will come into play. Besides, if Fidelity is able to snatch market share away from these 2 competitors look for them to offer their own zero funds in the future.
One last con, it’s still too early. Both funds were only created recently (inception 8/2018) & only time will tell if these funds will be around long-term.
Now the Pros
There are some good things about this fund:
No Fees – free is as I said before is everybody’s favorite word. Even if you already have a brokerage account, I see no harm in grabbing these 2 funds – that is if you have some spare cash just laying around.
Great for newbies – new to investing, opening up a Fidelity account with these too – plus the bond fund as a hedge – can get you started on the market. No minimum means anyone can get started for no\low fees.
In conclusion, this could be a perfect fund for first time investors, looking to get started in the market.
Sample Portfolio:
Cash – 20%
FZROX – Total Fund 50%
FZILX – Int’l Fund 20%
FXNAX – Bond Fund 10%
(.0025% exp. Ratio)
*AS OF 1/22/2020 *from 12/31/2019 – now
**AS OF 1/22/2020 **from 12/31/2019 – now
***AS OF 1/22/2020 ***from 12/31/2019 – now
Disclaimer: All content on this website, is for info-tainment purposes only. This information should not be considered complete, up to date, & is not intended to be used in place of professional, consultation, or advice of a financial advisor.