So you’re probably wondering – are Fidelity no fee funds worth it?
Recently Fidelity’s FREE ZERO index funds (FZROX, FNILX, FZIPX, FLIPX) were launched – but is it worth it?
In today’s video I break down how Fidelity ZERO index funds compare to Vanguard’s Admiral Funds and Fidelity’s regular index funds.
I also breakdown which Fidelity ZERO index funds to buy and who should buy Fidelity’s no fee funds.
If you’re curious about how to build your portfolio with Fidelity ZERO index funds and the pitfalls to look out for… THIS VIDEO IS FOR YOU!
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Are Fidelity no fee funds worth it? This is a question that many investors are asking themselves as they weigh the pros and cons of Fidelity Zero Funds against the more traditional Vanguard Admiral Funds. Both options have their own merits, but it ultimately comes down to individual investing strategies and goals.
Fidelity shook up the investment world in 2018 when it introduced the Fidelity Zero Funds, which are a lineup of index funds with no expense ratios. This means that investors can invest in these funds without having to pay any management fees, making them a very attractive option for cost-conscious investors.
On the other hand, Vanguard is known for its low-cost index funds, including the popular Admiral Funds, which also boast very low expense ratios and are well-regarded for their performance and stability.
So, are Fidelity no fee funds worth it compared to Vanguard Admiral Funds? The answer really depends on what you are looking for as an investor.
The main advantage of Fidelity Zero Funds is obviously the zero expense ratio, which can save investors a significant amount of money in the long run. Additionally, Fidelity offers a diverse range of no-fee funds, including ones that track the S&P 500, total market, international stocks, and more. This gives investors the ability to build a well-diversified portfolio without incurring any management fees.
However, it’s important to note that Fidelity does make money on these funds through securities lending, so while investors may not be paying management fees, there are still potential risks and costs associated with this practice.
On the other hand, Vanguard Admiral Funds are well-established, highly respected funds with a proven track record. While they do have slightly higher expense ratios compared to Fidelity Zero Funds, they are still very low-cost options that provide investors with access to a wide range of asset classes and investment strategies.
Ultimately, the decision between Fidelity Zero Funds and Vanguard Admiral Funds comes down to your individual investment strategy and goals. If you are a long-term, buy-and-hold investor who is primarily focused on low-cost, diversified investment options, either option could be a good fit for you. However, if you are more focused on specific asset classes or have a preference for a particular fund provider, that may be the deciding factor for you.
In conclusion, both Fidelity no fee funds and Vanguard Admiral Funds have their own advantages and drawbacks. It is important for investors to carefully consider their investment goals, risk tolerance, and cost considerations in order to make an informed decision. While Fidelity Zero Funds may offer an enticing no-fee option, Vanguard Admiral Funds also provide low-cost, diversified investment options with a proven track record. Ultimately, the best choice will depend on the individual investor’s needs and preferences.
Hey Jay, thanks for your content!
I just recently opened a vanguard for my tiRA and Roth IRA(before knowing about the zero fee options at Fidelity). I transferred the full 6K for 2020 into the “settlement fund” at Vanguard but haven’t purchased any specific index funds or ETFs.
I’m now trying to consider if I should at least take the Roth IRA and move it to Fidelity to purchase the zero fee options(since they will produce more gains without having the fee involved) and then keep my tIRA account with Vanguard to diversify. Also I’ve been reading on Vanguard may do better with tax deferred accounts(article below). So that’s also my reasoning with keeping one account with Vanguard and one with Fidelity.
I feel like I can never do enough research and I’m always learning something new and want to make the most informed decision I can with the information I have at the time. I’m super new to investing,any comments/past experiences are welcome!
Here’s the article I was referencing:
https://www.google.com/amp/s/www.forbes.com/sites/simonmoore/2020/02/23/researchers-compare-vanguard-and-fidelity-funds-heres-what-they-found/amp/
My IRA portfolio is 60% FZROX 30% FZILX 10% GBTC.
Great video and info. Vanguard is my preference. Zero fees are never truly zero fees.
why didn't you include dividend comparisons?
could you explain exactly what the inception date has to do with risk in say the scenario of say fnilx? if it's strategy is simply to track the s and p 500 what could really go wrong? what are some examples of how the inception date of this fund might specifically be an indicator of some kind of problem and what kind of problem might it be.
What about turnover rate? Capital gains distribution taxes?
I don't doubt Fidelity's ability to track market index as well as Vanguard. It isn't like they are new to running index funds. But if you already have Vanguard in a taxable account, it wouldn't make any sense to sell them and pay capital gains just to try to get a small advantage in expense ratio that Fidelity has currently. Vanguard fund can defer tax better than any other index fund because Vanguard index fund shares are a different class of shares as their ETF shares of the same fund. This means, the active participants making in-kind exchange to limit capital gains for ETF shares gets extended to its index fund. For that reason alone is enough to actually choose Vanguard over Fidelity in a taxable account even with the cost disadvantage. Vanguard also shares 100% of its revenue generated from securities lending thus offsetting some of the expense advantage of Fidelity. For retirement account, moving funds to Fidelity in theory can get better returns over very long periods of time but even the brief time that you be out of the market to make transfer happen could be too large to make up for from expense alone within your lifetime.
Hi! Thanks for this vid! I just opened up my Roth IRA with Fidelity as a 27yo. Subscribed and would LOVE an updated video of this!!
Have you thought about the idea of switching to Fidelity anymore at all! Super curious!
Suze turned me on to the Zero series. Glad to find this video. My favorite part: at 3:17 where Kevin says: "We're gonna RPF this s**t!". Gangsta! I've found no other entertainment-only advisor with anything close to this style! And the mic. Also gangsta! Unparalleled!
I have 75% in FZILX and 25% in FZROX. But it seems like I'm going to be buying more into FZROX 🙂
Great video. Especially for visual learners
The Fidelity ZERO funds and the ridding of their minimums came about in 2018 (you said 2019).
I invested in FZROX and FZILX since their inception.
Fidelity lowered their minimum to invest in August 2018 to $1. The zero net expense ratio was released in 2018 too. October 2019 they made all trades on stocks & ETFs free. Now as of February 2020, they offered fractional share purchasing for stocks and ETFs with limit orders.
I use Fidelity and it's because that's who my employer uses and I get a 401k match along with a HSA account. I've had Fidelity for the past 8 years or so and have zero complaints. Their web interface makes things easy. They have a great phone app. They have physical branch locations and their customer service has always been top notch. My 401k consists of the FZROX, FZILX, and FXNAX. My Roth IRA through them is a blue chip large growth mutual fund which I'll likely trade into a large cap index fund in the near future.
I get it, many have a hard on for Vanguard and they've been the index fund pioneer and leader for a long time but really Fidelity is a large, top notch brokerage in their own right with funds that equal Vanguard in terms of performance and expense ratios. It also seems like their customer service and accessibility is a lot better than Vanguard too. I haven't heard great things about Vanguards phone app. So really I don't think you can go wrong with either and comparing the two when it comes to performance and expense ratios is pulling at straws. Both are excellent in that regard. For me I really have no choice since I use a employer backed retirement plan with 401k match but am VERY THANKFUL they use Fidelity as the performance, usability, and customer service has always been top notch. I'm also thrilled that my employer 401k allows me to use the Fidelity Brokerage account that enabled me to essentially access Fidelity's entire portfolio rather than be limited to the standard 25 funds they offer. It has really opened the best of all worlds for me with a 401k match and brokerage link access so that I can invest how I want.
I was interested in your Investment Academy. Just out of your curiosity just wanted to know what your background is in investments and finance? I checked your website but couldn’t find the “about You” section. Thank you in advance for your response.
*Indices
Just invested on FZROX