The Short Version
- FZROX and FNILX charge 0.00%. That is not a promotional rate or a temporary waiver, it has been the standing fee since Fidelity launched them in 2018.
- They cost nothing because Fidelity wrote its own indexes instead of licensing the S&P 500 or CRSP, which removes the one fee an index fund cannot otherwise avoid.
- FXAIX charges 0.015%, which undercuts VOO's 0.03% on the identical index. Over 30 years on $10,000 that is a $318 difference, real but rarely decisive.
- The catch is portability. FZROX and FNILX cannot be moved to another broker, so leaving Fidelity means selling, and in a taxable account that realizes every gain at once.
- Fidelity's ETF lineup is small. FTEC, FDVV, and FBTC are exchange-traded; the famous names are all mutual funds.
The ZERO Funds Are Free Because Fidelity Wrote Its Own Index
Every index fund pays a licensing fee. Tracking the S&P 500 means paying S&P Dow Jones Indices for the right to use it, and tracking a CRSP or MSCI index means paying those providers. It is a small per-year cost, but it is a hard floor: a fund cannot charge less than what it owes its index provider and still cover custody, accounting, and audit.
Fidelity removed the floor by removing the provider. FZROX tracks the Fidelity U.S. Total Investable Market Index. FNILX tracks the Fidelity U.S. Large Cap Index. Both indexes are built in house, so there is no licensing fee to pay, and both funds launched in 2018 at a 0.00% expense ratio that has never moved.
This has a practical consequence worth knowing. FNILX is often described as an S&P 500 fund. It is not. It tracks Fidelity's own large-cap index, which holds a similar set of companies selected by different rules. The returns have tracked closely, but the two are not the same product, and anyone comparing FNILX to VOO line by line is comparing two different indexes.
FXAIX Undercuts VOO on the Identical Index
FXAIX, the Fidelity 500 Index Fund, charges 0.015%. VOO charges 0.03%. Both track the S&P 500, hold the same 503 companies at the same weights, and will deliver returns that differ only at the margins. Fidelity is, on this specific comparison, the cheaper option, which surprises people who assume Vanguard is always the low-cost answer.
The size of that advantage is worth stating plainly rather than leaving as a percentage. On a $10,000 lump sum held 30 years at a 7% gross annual return:
| Fund | Expense ratio | Value after 30 years |
|---|---|---|
| FZROX / FNILX | 0.00% | $76,123 |
| FXAIX | 0.015% | $75,803 |
| VOO / VTI | 0.03% | $75,485 |
| FTEC | 0.084% | $74,350 |
FXAIX beats VOO by $318 across three decades. That is a real number and it is also a small one, roughly $10 a year. It is not large enough to justify moving an existing portfolio, and it is not large enough to outweigh the structural differences below. Anyone choosing between them on cost alone is optimizing the smallest variable in the decision.
The structural difference matters more. FXAIX is a mutual fund. It prices once daily after the close, cannot be bought with a limit order, and cannot be traded intraday. VOO is an ETF and does all three. Neither behaviour is better in the abstract, and for a buy-and-hold investor making monthly contributions the daily pricing is arguably an advantage, since it removes the temptation to time an entry.
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The Restriction That Makes a Free Fund Expensive
Here is the part that rarely appears next to the 0.00% headline. FZROX and FNILX are Fidelity-proprietary. They cannot be transferred in kind to another brokerage, because no other brokerage can hold them.
Normally, moving brokers is mechanical. An ACATS transfer moves your shares of VTI from one firm to another without selling anything, so nothing is realized and no tax is due. That option does not exist for the ZERO funds. Leaving Fidelity means liquidating them first.
In a traditional IRA or Roth IRA this costs nothing beyond a day out of the market, since selling inside a retirement account triggers no tax. In a taxable brokerage account it is a different matter entirely. A position held for a decade can carry a large unrealized gain, and closing it in a single year realizes all of it at once, potentially pushing the gain into a higher bracket than it would ever have faced if sold gradually.
This is why the ZERO funds fit retirement accounts more comfortably than taxable ones. In an IRA the restriction is close to costless. In a taxable account you are trading a saving of roughly $10 per year per $10,000 against a potential tax bill measured in thousands. Weighted honestly, that trade often favours the ordinary index fund.
Fidelity's ETF Lineup Is Smaller Than Its Reputation
Fidelity is a household name in index investing, so people reasonably assume it fields an ETF lineup comparable to Vanguard's or iShares'. It does not. The firm's strength has been index mutual funds, and its exchange-traded products are comparatively few.
| Ticker | Structure | Exposure | Expense ratio |
|---|---|---|---|
| FXAIX | Mutual fund | S&P 500 | 0.015% |
| FZROX | Mutual fund | Total US market, Fidelity index | 0.00% |
| FNILX | Mutual fund | US large cap, Fidelity index | 0.00% |
| FTEC | ETF | US technology sector | 0.084% |
| FDVV | ETF | High dividend yield | 0.15% |
| FBTC | ETF | Spot bitcoin | 0.25% |
FTEC is the most competitive of the three ETFs. At 0.084% it tracks the same US technology sector as VGT at a similar cost, and the two funds are close substitutes. FDVV takes a different approach to dividends than SCHD, screening for yield with a quality overlay rather than SCHD's stricter fundamental screens. FBTC holds spot bitcoin at the same 0.25% as IBIT, and the choice between them comes down to issuer preference and liquidity rather than cost.
Matching the Product to the Account
The Fidelity lineup rewards a decision made in a specific order: account type first, then structure, then fee.
- Retirement account, staying at Fidelity. The ZERO funds are hard to argue against. The transfer restriction costs nothing inside an IRA, and 0.00% is the lowest fee available anywhere.
- Taxable account. The restriction has teeth. FXAIX at 0.015% keeps most of the cost advantage without the proprietary lock, and a standard ETF keeps full portability for the price of one and a half basis points.
- Might consolidate brokers later. Portability is worth more than the fee difference. An ETF held anywhere transfers anywhere.
- Want intraday control. Mutual funds price once daily, so the ETFs are the only option that supports limit orders and intraday execution.
For the wider question of how fees compound across a whole portfolio, see the expense ratios guide, and for the structural differences that separate the two wrappers, the ETF vs mutual fund guide covers the mechanics in more depth.
Questions People Ask
No. FXAIX is a mutual fund, specifically the Fidelity 500 Index Fund. It tracks the same S&P 500 index that VOO and SPY track, but it prices once per day after the market closes rather than trading continuously. You cannot place a limit order on it, you cannot buy it intraday, and you cannot hold it at most brokers other than Fidelity. What you get in exchange is a 0.015% expense ratio and no bid-ask spread, since there is no secondary market to cross.
Two ways, neither hidden. Fidelity built its own indexes rather than licensing the S&P 500 or a CRSP index, which removes the licensing fee that every other index fund pays. And the funds only exist inside Fidelity accounts, so they work as an acquisition tool: a 0.00% headline brings in assets, and Fidelity earns on the surrounding relationship through cash sweep, securities lending, margin, and advisory products. The 0.00% is real. It is a customer acquisition cost the firm chose to pay.
No, and this is the single most important thing to understand before you use the ZERO funds in a taxable account. FZROX and FNILX are Fidelity-proprietary and cannot be transferred in kind to another brokerage. Moving your account means selling them first. In an IRA that is a non-event. In a taxable account it realizes every unrealized gain in one go, and a position held for years can carry a very large one.
They track the same index and their costs are 0.015% and 0.03%, a difference worth about $318 on a $10,000 lump sum over 30 years at a 7% gross return. That gap is real but small enough that structure usually decides it instead. FXAIX is a mutual fund tied to Fidelity; VOO is an ETF that trades anywhere and transfers anywhere. Investors who expect to stay at Fidelity often prefer FXAIX; investors who want portability generally prefer VOO.
Fewer than most people assume. FTEC (technology, 0.084%), FDVV (high dividend, 0.15%), and FBTC (spot bitcoin, 0.25%) are exchange-traded. FXAIX, FZROX, and FNILX, the three names Fidelity is best known for, are all mutual funds. Fidelity's strength has historically been in index mutual funds rather than a broad ETF lineup, which is the reverse of Vanguard's and iShares' position.
For FXAIX, FZROX, and FNILX, effectively yes. Some brokers list Fidelity mutual funds with a transaction fee, and the ZERO funds are not available outside Fidelity at all. The three ETFs are different: FTEC, FDVV, and FBTC trade on an exchange like any other ETF and can be bought at any broker.