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How do you diversify? What can you choose with all the available assets out there? Let’s take a look at FNILX vs. FZROX that you may want to consider as you venture forth to your investment journey.
If you are searching for an investment idea, one of the options you may want to consider is index funds. It is a well-known fact that index funds generally perform better than other actively managed funds after fees. They also don’t rely on fund managers, who can make mistakes.
Fidelity has launched a new lineup of zero-index funds in the recent past. Two of their most popular funds in this category are FNILX and FZROX. These two funds have a lot of similarities. They both have a zero expense ratio making them the most affordable funds in the industry.
Both funds also invest in US large companies, meaning they almost have a similar performance. They invest in undervalued stocks that can offer a great reward to investors in the long term. However, they don’t invest in penny stocks. Despite these similarities, they also have some notable differences. Let’s compare FNILX vs. FZROX.
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FNILX: Fidelity Zero Large Cap Index Fund
Launched by Fidelity in 2018, FNILX or Fidelity Zero Large Cap Index Fund seeks to provide investment results that match the returns of the large-capitalization US companies. This means that it invests in common shares of the large-cap companies that are part of the Fidelity US Large Cap Index, whose goal is to match the performance of the US large-cap shares.
The passively-managed fund has no commissions, fees, and minimum investment, making it an excellent choice for long-term investors. As a US Large Cap Index Fund, FNILX has invested in 516 corporations and is an S&P 500 index fund. The fund invests 28.09% of its holdings in the most significant ten companies.
The Fidelity zero fund has managed to achieve a no expense ratio as it invests in Fidelity proprietary indexes and passes the fund’s transaction costs to investors.
FZROX: Fidelity Zero Total Market Index Fund
One of the most recent US Total Market Index Fund is FZROX. Launched on the 2nd of August 2018, the fund aims to provide investors with returns that match the return of various stocks in the United States. Investing assets in common stocks are part of the Fidelity US Total Investable Market Index, a float-adjusted market-cap-weighted index.
FZROX has invested in over 2,442 companies in the United States. 24.06% of the fund is invested in the ten most significant companies in the US. It’s also large-cap weighted, like the case with most total market funds.
Therefore, over 80% of the holdings are in the most significant 500 US companies. The other 20% of the fund is invested in the other 2,000 small and medium cap companies. FZROX provides exposure to all publicly traded securities.
FNILX Vs. FZROX: Key Similarities
Here are the main similarities between FNILX and FZROX:
Minimum Investment
Both FNILX and FZROX have no minimum investment. This makes them a user-friendly option for beginners looking to venture into investments as part of their personal finance.
Even if you start investing with little to no money, you will be able to invest in these funds. And if you’re looking for ways to make extra money to invest, you can try out different side hustles or check out companies with the best benefits.
Dividends
Both FNILX and FZROX allow the automatic reinvestment of dividends, contributions, reinvestments, and withdrawals.
Investors can also buy fractional shares in both funds. Both are index funds and not Exchange-Traded Funds (ETFs), which have many advantages. ETFs don’t allow the partial purchase of shares luckily these two do.
FNILX Vs. FZROX: Key Differences
Here are the main differences between FNILX and FZROX:
Asset Classes
One of the significant differences between the two funds is the asset class. FZROX is a total stock market index fund from Fidelity.
On the other hand, FNILX is Fidelity S&P 500 index fund. As a stock market index fund, S&P 500 tracks the shares of the 500 biggest-cap US companies. It represents the stock market’s performance as it reports the returns and risks of the biggest companies.
A total stock market index fund consists of a stock portfolio tracking an equity index within the fund. Therefore, FZROX invests in small-cap, medium-cap, and large-cap stocks in American, European, and Asian countries.
Volatility
FZROX includes the small and mid-cap stocks, making it more volatile than the large-capitalization FNLIX. This means it may have more significant falls and gains than FNLIX. Therefore, it has more fluctuations.
FNILX Vs. FZROX: Pros and Cons
Here are the pros and cons of the two funds:
| Pros of FZROX | Cons of FZROX |
| -A product of Fidelity -Zero expense ratio -No minimum investment -Ability to buy a fractional share | -Usually hands-off -Trailing performance -No intraday trading |
| Pros of FNILX | Cons of FNILX |
| -No minimum investment -Zero expense ratio -Passively managed -Historical performance | -It doesn’t have intraday trading -A lower level of diversification -No market pricing in real-time |
FNILX Vs. FZROX: Composition Differences
One of the intriguing things is that FNILX and FZROX have similar holdings. The reason for this is that while FNILX owns the S&P 500, FZROX still holds all the companies that make the S&P 500. Therefore, the biggest S&P 500 companies are still underlying FZROX holdings.
The FNILX investment by sectors is as follows:
- IT: 29.41%
- Healthcare: 13.17%
- Consumer discretionary: 12.52%
- Financials: 11.13%
- Communication services: 10.75%
- Industrials: 7.75%
- Consumer staples: 5.40%
- Energy: 2.62%
- Real Estate: 2.55%
- Materials: 2.28%
- Utilities: 2.23%
- Multi-Sector: 0.17%
The FZROX investment by sector is as follows:
- IT: 27.25%
- Healthcare: 13.09%
- Consumer discretionary: 12.52%
- Financials: 11.8%
- Communication services: 9.73%
- Industrials: 8.88%
- Consumer staples: 5.06%
- Real Estate: 2.55%
- Energy: 2.73%
- Materials: 2.66%
- Utilities: 2.30%
- Multi-Sector: 0.54%
The two funds invest in almost similar sectors. However, the total market index percentage points are more in the lower sections of the sectors.
For instance, real estates and utilities have a higher representation in FZROX than in FNILX by 0.82% and 0.38%, respectively.
Here are the top 10 holdings of each fund:
| Name | FNILX | FZROX |
| Microsoft Corp. | 6.15% | 5.26% |
| Apple Inc. | 5.80% | 4.97% |
| Amazon.com Inc. | 3.62% | 3.10% |
| Tesla Inc. | 2.23% | 1.91% |
| Alphabet Inc Class A | 2.20% | 1.88% |
| Alphabet Inc Class C | 2.06% | 1.77% |
| Meta Platforms Inc. Class A | 1.90% | 1.63% |
| NVIDIA Corp | 1.57% | 1.35% |
| Berkshire Hathaway Inc. Class B | 1.31% | 1.12% |
| JPMorgan Chase & Co. | 1.25% | 1.07% |
FNILX Vs. FZROX: Fees
Both FNILX and FZROX do not charge any fees.
Because they don’t charge fees, you will keep higher amounts of your money invested. That means that you’re having more and more money that is working for you, getting compound returns, and will bring you one step closer to reaching financial independence.
FNILX Vs. FZROX: Fund size
The size of the fund can be a good indicator of which of these funds is more popular. At the time of writing, FZROX had net assets of $13.26 billion.
On the other hand, FNILX had net assets of $5.61 billion.
FNILX Vs. FZROX: Performance Differences
We have seen large-capitalization companies performing better than small and medium-capitalization companies in the recent past. This means that FNILX has slightly outperformed FZROX on a one and three-year basis.
Please keep in mind that past performance isn’t an indicator of future performance.
Here’s a summary of the performance of the two funds:
| Period | FNILX | FZROX |
| YTD Returns | -2.55% | -2.56% |
| 1-Month Return | 0.24% | 0.37% |
| 3-Month Return | 4.10% | 3.20% |
| 1-Year Return | 22.27% | 20.46% |
| 3-Year Return | 24.09% | 23.29% |
| 5-Year Return | N/A | N/A |
| 10-Year Return | N/A | N/A |
FNLIX Vs. FZROX: Which One Should You Invest In?
Both FNLIX and FZROX are among the best funds. Since the companies they track are 80% similar, there are many similarities between them. If you already have an S&P 500 as part of your portfolio, you may want to consider FZROX so that you diversify your portfolio.
If you are searching for an excellent fund to invest in an investment account or a 401(k), you may want to consider FZROX. Historical data shows that the medium and small-cap companies have performed better than the S&P 500 companies in their growth. FZROX is also more diversified, making it an excellent choice for long-term use.
Both are great funds that have similar holdings and identical zero fees. On top of that, both funds do not require a minimum investment.
Now that you know the pros and cons of these funds, you need to consider the state of your personal finances and your long-term plans and goals. This will help you narrow down your choice of which fund best suits you. Invest wisely based on what you have and what you want for yourself in the future. That’s the winning combination in your investment strategy.
Related Reads:
- VUG Vs. VOO: A Comparison Of Two Popular ETF Funds
- FNILX Vs. FXAIX – Are They Worth It?
- SPLG Vs. SPY – Which Is A Better Buy?
- VTSAX Vs. VFIAX: Which One Is Better?
- VEU Vs. VXUS: A Comparison Of Two ETFs
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Marjolein Dilven
Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Radical FIRE, a personal finance platform, and Spark Nomad, a travel platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.
