Yes. Fidelity Zero Funds are a good choice for most investors inside tax-advantaged accounts such as an individual retirement account (IRA) or a Roth IRA. As of November 2026 they charge a 0.00% expense ratio and have no minimum.
The catch is portability. The funds can't move to another broker, so you must sell first, and in a taxable account that sale is taxed. For 2027, the top federal rate on long-term gains is 20%. A 3.8% net investment income tax (NIIT) also applies once modified adjusted gross income (MAGI) passes $200,000 for single filers or $250,000 for joint filers. The Internal Revenue Service (IRS) explains how capital gain distributions are reported.
The fee savings are small. VTSAX charged 0.04% in November 2026, or $40 a year on $100,000. The ICI Fact Book puts the average for equity mutual funds at 0.40% for 2025. One forced sale can wipe out decades of that saving.
Understanding Fidelity Zero Funds Structure and Regulatory Basis
Mutual funds must register with the Securities and Exchange Commission and publish a standard fee table. The law requires disclosure but sets no floor or cap on operating expenses, as the agency's bulletin on mutual fund fees explains.
The only caps cover sales charges. Under Rule 2341 of the Financial Industry Regulatory Authority, a front-end load can't top 8.5%. Asset-based sales charges (12b-1 fees) are capped at 0.75% of average net assets a year, plus a service fee of up to 0.25%.
Fidelity can afford zero because the funds track indexes it built itself, so it pays no licensing fee. FZROX follows the Fidelity U.S. Total Investable Market Index, which uses a rules-based methodology.
The Four Fidelity Zero Funds Available
All four funds have operated since 2018. Holdings counts are from Fidelity's fund pages, dated August 31 or September 30, 2026.
- FZROX (ZERO Total Market) held 2,631 U.S. stocks of all sizes and about $41.5 billion in net assets as of October 31, 2026, per its Fidelity fund page.
- FNILX (ZERO Large Cap) has 507 holdings that look much like the S&P 500.
- FZIPX (ZERO Extended Market) holds 2,125 mid and small U.S. stocks. Paired with FNILX, it matches FZROX.
- FZILX (ZERO International) tracks the Fidelity Global ex U.S. Index. Its 2,223 foreign stocks include no small caps.
None has a minimum. You can buy them only in Fidelity retail accounts, such as IRAs, health savings accounts (HSAs) and taxable accounts, not in employer 401(k) plans.
How Fidelity Profits From Zero Expense Ratio Funds
A fund with no fee still costs money to run, so Fidelity earns its return in other ways. Three of them explain why the zero price can last.
Securities Lending Revenue Generation
A fund can lend shares it owns to short sellers for a fee. The borrower posts collateral worth at least 102% of the loan. The lending agent keeps a share of the income, and the rest goes to the fund. Research on securities lending strategies shows this income can matter for index funds.
Fidelity lends from the Zero Funds just as it does from its other funds. The income helps cover accounting, custody and legal costs. Each fund's annual shareholder report lists lending income in its statement of operations. You can find the report under Prospectus & Reports on the fund's Fidelity page.
Internal Trading Cost Management
Zero Funds pay trading costs like any other fund, but much of that trading can run through Fidelity Capital Markets, the firm's own broker-dealer. A cost to one part of Fidelity becomes revenue for another part, and it never shows up as a fee on your statement.
The Securities and Exchange Commission bars self-dealing that hurts shareholders, so trades must still meet the best execution standard.
Customer Acquisition and Asset Retention Strategy
The Zero Funds work as loss leaders, like a store that prices milk below cost to bring shoppers in. They draw customers and assets to Fidelity.
Once you have an account, Fidelity can earn money in other ways. It keeps an interest spread on cash in your core money market position. It also collects fees on actively managed funds and interest on margin loans. When you trade stocks, it may receive payment for order flow from market makers. The zero price also helps Fidelity compete with Vanguard and Schwab.
Detailed Comparison With Competitor Index Funds
Zero fees only matter if the funds keep pace with their rivals. The numbers below come from each fund's own page, and each figure carries its as-of date.
FZROX vs VTSAX vs FSKAX Performance Analysis
The three total market funds move almost in lockstep.
Average annual total returns as of September 30, 2026:
| Fund (2026 expense ratio) | 1-year | 3-year | 5-year |
|---|---|---|---|
| FZROX (0.00%) | 15.41% | 22.45% | 12.80% |
| FSKAX (0.015%) | 15.28% | 22.35% | 12.59% |
| VTSAX (0.04%) | 15.32% | 22.31% | 12.55% |
Figures are from the FZROX, FSKAX and VTSAX fund pages. From its August 2018 start through September 30, 2026, FZROX returned 14.11% a year.
FZROX holds fewer stocks than FSKAX, which had 3,791 on September 30, 2026. The missing names are mostly micro-cap stocks. These smallest companies carry too little weight to move returns.
In 2026, FSKAX costs 0.015%, or $15 a year on $100,000, and it can move to another broker. So portability, not cost, should decide between the two. Fidelity's standard index funds are the closest swap.
FNILX vs VOO vs FXAIX Large Cap Comparison
Large-cap results are just as close. As of September 30, 2026, FNILX returned 15.25% over one year and 23.02% a year over three years. FXAIX returned 15.72% and 22.87%. Which fund leads changes from period to period, because FNILX follows a Fidelity index rather than the S&P 500.
The bigger difference is structure. VOO is an exchange-traded fund (ETF) that trades all day. FNILX prices once a day after the market closes. For buy-and-hold investors, that rarely matters.
On August 31, 2026, the ten largest FNILX positions were Nvidia, Apple, Microsoft, Amazon, both Alphabet share classes, Broadcom, Meta, Micron and Tesla, per its Fidelity page. Together they made up 36.94% of the fund.
Fees shown are 2026 expense ratios.
| Action | Consequence (2026 fees) |
|---|---|
| Investing $10,000 in FNILX | No annual fee; the full amount stays invested |
| Investing $10,000 in VOO | About $3 a year (0.03%) |
| Investing $10,000 in FXAIX | About $1.50 a year (0.015%) |
| Holding for 30 years at 8% | FNILX about $100,627; VOO about $99,790; FXAIX about $100,210 |
| Switching brokers from a taxable account | FNILX must be sold (taxable); VOO and FXAIX transfer freely |
Assumes one $10,000 deposit, an 8% yearly return before fees and annual compounding.
FZILX vs VTIAX International Stock Comparison
Coverage is the real difference. FZILX holds only large and mid-size foreign companies, while VTIAX also holds small caps, which some investors want for their diversification benefits.
As of September 30, 2026, FZILX returned 20.30% over one year, 21.13% a year over three years and 9.99% a year over five. Vanguard lists VTIAX's returns on its fund page, with a 0.09% fee in 2026. FTIHX charges 0.06% in 2026 and includes small caps.
| Feature | FZILX (as of September 30, 2026) |
|---|---|
| Expense ratio | 0.00% |
| Holdings count | 2,223 stocks |
| Small-cap coverage | No (large and mid only) |
| Developed markets | About 69% (as of August 31, 2026) |
| Emerging markets | About 31% (as of August 31, 2026) |
| Feature | VTIAX (as of September 30, 2026) |
|---|---|
| Expense ratio | 0.09% |
| Holdings count | 8,901 stocks |
| Small-cap coverage | Yes (complete) |
| Developed markets | About 73% |
| Emerging markets | 26.6% |
Fidelity counts South Korea as an emerging market and Vanguard's index counts it as developed, so the splits above are not a like-for-like match.
Three Most Common Investor Scenarios With Zero Funds
These three examples show where Zero Funds work well and where they backfire.
Scenario One: Young Professional Opening First Roth IRA
Emma, age 25, opens her first Roth IRA at Fidelity. She puts in $625 a month, which reaches the Roth IRA limit of $7,500 for 2027. She qualifies while her MAGI stays under the 2027 phase-out of $158,000 to $173,000 for single filers, under the IRS limits for 2027.
| Decision point | Outcome |
|---|---|
| Opening a Roth IRA at Fidelity | Gains access to Zero Funds with no minimum |
| Choosing FZROX as the core holding | Pays no fund fee; the full contribution is invested |
| Adding automatic contributions | Builds the position with no transaction cost |
| Holding 30 years or more | Tax-free growth with no expense drag |
| Switching brokers if needed | Sell inside the Roth with no tax, then move the cash |
At 8% a year before fees, compounded monthly for 30 years, she ends with about $931,000 at a 0.00% fee. At 0.04% she ends with about $924,000, and at 0.50% about $842,000, a gap of about $89,000.
If Emma later prefers another broker, she can sell FZROX inside the Roth and move the cash, with no tax due.
Scenario Two: Mid-Career Worker Rolling Over 401(k)
Michael, age 42, changes jobs and leaves behind a $150,000 401(k) that charged 0.75% in total fees. He asks for a direct rollover to a Fidelity Rollover IRA, so the money never passes through his hands.
| Rollover step | Tax consequence |
|---|---|
| Leaving the previous employer | Old 401(k) sits with limited investment options |
| Direct rollover to a Fidelity IRA | No tax or penalty; stays tax-deferred |
| Investing in FZROX and FZILX | No fund fees on the lump sum |
| Working for a new employer | The new job's 401(k) stays separate and active |
| Rebalancing once a year | No tax owed inside the IRA |
A direct rollover has no deadline for picking investments. The 60-day rule applies only to an indirect rollover, where the plan pays him and withholds 20% for tax. He must then deposit the full amount within 60 days. The steps to roll over to Fidelity are the same for most plans.
Michael puts 70% in FZROX and 30% in FZILX. At a 7% yearly return before fees, compounded once a year for 23 years, $150,000 grows to about $711,000 at a 0.00% fee. At 0.50% it reaches about $638,000, or roughly $73,000 less.
Scenario Three: High-Net-Worth Investor Using Taxable Account
Jennifer, age 50, sells a business and puts $500,000 into FZROX in a taxable Fidelity account. Ten years later the account has grown to $800,000, and she wants to move everything to Vanguard for estate planning help. FZROX can't transfer in-kind, so she has to sell and realize a $300,000 long-term gain.
In the worst case she pays $71,400 in federal tax. That is $300,000 taxed at the 20% capital gains rate plus the 3.8% NIIT. For 2027, the 20% rate applies only to taxable income above $563,200 for single filers or $633,600 for joint filers, under Rev. Proc. 2026-35, so many sellers owe less. The NIIT thresholds are not indexed for inflation. Had she bought VTI at a 0.03% fee, she could have moved her shares in kind, with no sale and no tax.
Federal rates for tax year 2027.
| Investment choice | Future problem (2027 rates) |
|---|---|
| $500,000 in FZROX in a taxable account | Investment is tied to Fidelity |
| Fund grows to $800,000 over 10 years | $300,000 of unrealized gain builds up |
| Moving to Vanguard for advisory services | Must sell FZROX and realize the $300,000 gain |
| 20% long-term capital gains tax | $60,000, plus possible 3.8% NIIT |
| Total federal tax, worst case at 23.8% | $71,400, more than decades of saved fees |
Mistakes to Avoid With Fidelity Zero Funds
Most problems with Zero Funds come from where they are held, not from the funds themselves. These five mistakes come up most often.
Mistake One: Using Zero Funds in Taxable Accounts Without Portability Planning
Zero Funds must be sold before transferring to another broker. In an IRA that sale costs nothing. In a taxable account it turns every dollar of growth into a taxable gain.
Free sounds unbeatable, but people leave brokers for many reasons, such as better service, merging accounts after a marriage, or an adviser at another firm.
The fix is to hold portable funds in taxable accounts. Good choices include the ETFs VTI, VXUS and VOO, or Fidelity's FSKAX, FTIHX and FXAIX. Their 2026 fees of 0.015% to 0.06% are cheap insurance. A look at which Fidelity fund fits each account can help you sort them.
Mistake Two: Ignoring Dividend Distribution Timing Differences
FZROX pays its dividend once a year in December. Its last payout was about $0.24 a share in December 2025. Funds differ in dividend frequency. In a taxable account, one lump payment can add to your income in a year when you're near a tier that raises Medicare premiums.
If you want steady cash, check the schedule before you buy. Recent records show FSKAX paying in April and December and FTIHX in December, so Fidelity's alternatives are not quarterly either. Lists of Fidelity funds for a Roth IRA often include both, and inside a Roth the timing doesn't matter.
Mistake Three: Overlooking Reduced Holdings Coverage in International Funds
FZILX leaves out international small caps. In 2026, large and mid-size companies make up roughly three-quarters to 85% of the market's value outside the United States, so the fund skips the rest.
FZROX includes U.S. small caps and FZILX has no foreign ones. Held together, they leave you overweight small U.S. companies, which is an accidental bet. You can accept the gap or hold FTIHX, which covers large, mid and small foreign stocks for a small fee.
Mistake Four: Forgetting About Capital Gains Distributions in Taxable Accounts
A mutual fund must pass along the gains it realizes when it sells stocks. In a taxable account these capital gains distributions are taxed, even if you reinvest them.
FZROX paid no capital gain distribution in December 2025. That record is not a promise. After eight years the fund holds large built-in gains, and heavy redemptions could force it to sell. Knowing how funds pass on gains helps you read the December notice.
ETFs have an edge here. Through the creation and redemption process, market makers can take low-basis shares out of an ETF without the fund realizing a gain. For taxable money, ETFs usually offer better tax efficiency, even compared with a fund that charges no fee.
Mistake Five: Maxing Out 401(k) Too Early and Missing Employer Match
This mistake catches savers who rush to fill a 401(k) before moving on to an IRA. The employee limit for 2027 is $25,500 for a 401(k), with an $8,500 catch-up at age 50 and $11,750 at ages 60 to 63. If your employer matches each paycheck and you hit the limit early, the matching contributions stop when your deposits do.
Take a worker whose 6% match, paid per paycheck, is worth $6,000 a year. Reaching the 2027 limit in six months takes about $4,250 a month, so the employer matches for only those six months. With no year-end true-up, about $3,000 of the match is lost.
Spread your deposits across all 12 months, and ask whether your plan offers a true-up. Once you have the full match, send extra savings to a Fidelity IRA.
Do's and Don'ts for Zero Funds Investment
These two lists turn the points above into quick rules.
| Do's | Why this matters |
|---|---|
| Use Zero Funds in IRAs and Roth IRAs | Selling inside these accounts triggers no tax, so portability stops being a concern |
| Pair FZROX with FZILX for basic diversification | U.S. and international stocks in a simple two-fund portfolio |
| Set up automatic contributions | No minimums, so small regular deposits build the position |
| Pair FZIPX with FNILX if you split by size | Together they match FZROX; FZIPX is not needed if you already hold FZROX |
| Check your employer's 401(k) match schedule | Capture the full match before sending money to an IRA |
| Review your allocation once a year | Keeps your stock and bond mix on target |
| Use fractional shares | Invest exact dollar amounts with no cash left over |
| Reinvest dividends automatically | Keeps the whole balance compounding |
| Don'ts | Why this matters |
|---|---|
| Avoid Zero Funds in taxable accounts | You must sell to switch brokers, which can trigger a large tax bill |
| Do not assume FZILX covers all international stocks | It has no small caps; FTIHX does |
| Never confuse a zero fee with zero risk | The funds carry full stock market risk |
| Do not ignore tax-loss harvesting | The IRS has not defined "substantially identical," so swapping funds on different indexes is a judgment call |
| Avoid delaying yearly contributions | Waiting costs months of tax-advantaged growth |
| Never chase performance among the four funds | Each fills a different role; choose by allocation |
| Do not forget required minimum distributions | Traditional IRA withdrawals must start at age 73, or 75 if born in 1960 or later |
| Avoid selling in a downturn | A zero fee can't make up for locking in losses |
Pros and Cons of Fidelity Zero Funds
The table below weighs the benefits against the drawbacks. Holdings counts are from the fund pages as of September 30, 2026.
| Pros | Cons |
|---|---|
| Zero expense ratio keeps every dollar invested | Proprietary indexes mean the funds can't move to another broker |
| No minimum investment; start with $1 | Fewer holdings: FZROX has 2,631 stocks versus 3,791 for FSKAX |
| Four funds cover U.S. and international stocks | Dividends are paid once a year, in December |
| No portability problem inside IRAs and Roth IRAs | Requires a Fidelity brokerage account |
| Returns have matched or slightly beaten comparable index funds | Gains in a taxable account tie you to Fidelity |
| Suits small, regular deposits with no transaction fee | FZILX has no international small caps |
| Securities lending income helps cover fund costs | About eight years of history, less than older index funds |
| Fractional shares available | Not on employer 401(k) plan menus |
In retirement accounts the pros clearly win, because the main drawback disappears. In taxable accounts the portability limit cancels out the benefit for many people. Young savers in Roth IRAs gain the most.
Step-by-Step Process for Implementing Zero Funds Portfolio
Step One: Open the Appropriate Fidelity Account Type
Pick a traditional IRA, a Roth IRA, or a Rollover IRA for an old 401(k). The online application process has no minimum deposit. The IRA contribution limit for 2027 is $7,500, plus $1,100 as a catch-up at age 50 or older. Direct Roth contributions phase out at higher incomes (see the 2027 limits table below). Above that range, some earners use a backdoor Roth.
Step Two: Fund the Account Through Transfer or Contribution
Link your bank account for electronic transfers, which take 1-3 business days. For a 401(k), ask your old plan for a direct rollover, with the check payable to "Fidelity Management Trust Company FBO [Your Name]." A check made out to you triggers 20% withholding.
Step Three: Allocate Assets Among Zero Funds Based on Goals
A common mix is 70% FZROX and 30% FZILX. For less volatility, add FXNAX, the Fidelity U.S. Bond Index Fund. A guide to the best Fidelity fund for each goal can narrow the choice. To buy, enter the ticker and a dollar amount.
Step Four: Set Up Automatic Contributions and Rebalancing
Schedule automatic monthly transfers from your bank, a habit known as dollar-cost averaging. A self-directed Fidelity IRA does not rebalance on its own. Rebalance by hand once or twice a year, or when a holding drifts more than 5 percentage points from its target.
Step Five: Monitor and Adjust for Life Changes
Review your mix after big life changes, and shift toward bonds as retirement nears. In a taxable account, if FSKAX falls below what you paid, you can sell it at a loss and buy FZROX, which tracks a different index. The wash sale rules disallow the loss if you buy a substantially identical fund within 30 days before or after the sale, including in your IRA. The IRS has not said whether two such funds are substantially identical, so the swap carries some risk.
Who Runs Zero Funds and the Terms That Affect Your Return
- Fidelity Management & Research Company is the adviser. It runs the portfolios and designs the indexes.
- The Securities and Exchange Commission's Investment Management division oversees funds, which file shareholder reports on Form N-CSR.
- The Financial Industry Regulatory Authority's Rule 2341 caps sales loads and 12b-1 fees.
- The FZROX benchmark's construction methodology screens stocks by size, liquidity and float.
- An expense ratio is a fund's yearly cost. A 0.50% ratio takes $50 a year from every $10,000.
- Securities lending fees are revenue that offsets fund costs.
- A capital gains distribution pays out gains the fund realized, at least once a year.
- Net asset value is a fund's assets minus liabilities, per share. Trades fill at that end-of-day price.
- Tracking error is the gap between a fund and its index: 15.41% for FZROX against 15.43% for its index in the year ended September 30, 2026.
Detailed Tax Implications Across Account Types
The same fund is taxed very differently depending on the account that holds it. The sections below cover each account type, using the official 2027 figures.
Traditional IRA and Rollover IRA Tax Treatment
Traditional and Rollover IRAs are taxed the same way. Contributions may be deductible, depending on your income and whether a workplace plan covers you. For 2027, a single filer covered by a workplace plan loses the deduction across MAGI of $83,000 to $93,000. Joint filers lose it across $133,000 to $153,000 when the contributing spouse is covered. When only the other spouse is covered, the range is $250,000 to $260,000. The IRS posts the current IRA deduction limits on its site.
Growth is tax-deferred, so the December-only Zero Fund dividend creates no yearly tax bill.
Rules for tax year 2027.
| Traditional IRA feature | Tax consequence (2027) |
|---|---|
| Contributions | May be deductible, which lowers this year's tax |
| Investment growth | Tax-deferred; no yearly reporting of dividends or gains |
| Withdrawals after 59½ | Taxed as ordinary income |
| Withdrawals before 59½ | 10% penalty plus ordinary income tax |
| Required minimum distributions | Start at age 73 (75 if born in 1960 or later) |
Withdrawals before age 59½ avoid the penalty only if one of the exceptions applies, such as disability, a first home purchase or substantially equal periodic payments.
Roth IRA Tax-Free Growth Structure
You make Roth IRA contributions with after-tax money, so there is no deduction. For 2027, direct contributions phase out at MAGI of $158,000 to $173,000 for single and head-of-household filers. For joint filers the range runs up to $260,000. Above those ranges, some people make a nondeductible traditional IRA contribution and convert it, a backdoor Roth that relies on the conversions the tax law allows.
| Roth IRA feature | Tax consequence |
|---|---|
| Contributions | After-tax dollars; no deduction |
| Investment growth | Tax-free |
| Qualified withdrawals | No tax after age 59½ and five years |
| Contribution withdrawals | Contributions can come out at any time, tax-free |
| No required distributions | None for the original owner; the account can pass to heirs |
The Roth is the best fit of any account for Zero Funds. You can sell FZROX with no tax and buy a fund at a new broker, and the zero fee adds to tax-free compounding.
Taxable Brokerage Account Consequences
A taxable account has no tax shelter. Qualified dividends and long-term gains get the lower capital gains rates. For 2027, the rate is 0% up to $51,050 of taxable income for single filers and $102,100 for joint filers. The top rate starts above $563,200 for single filers or $633,600 for joint filers, with 15% in between.
Your broker reports fund payouts on Form 1099-DIV. Capital gain distributions in box 2a go on Schedule D, or straight on Form 1040 if you have no other gains or losses. Dividends go on Form 1040.
In the worst case for 2027, an investor who must sell FZROX with $200,000 of gain pays the top long-term rate plus the 3.8% NIIT, a federal bill of $47,600.
Rates for tax year 2027.
| Taxable account event | Tax treatment (2027) |
|---|---|
| Qualified dividends | 0%, 15% or 20% (2027 thresholds in the text above) |
| Ordinary dividends | Ordinary income rates, up to 37% |
| Long-term capital gains (over 1 year) | 0%, 15% or 20% (2027 thresholds in the text above) |
| Short-term capital gains (1 year or less) | Ordinary income rates |
| Mutual fund capital gains distributions | Passed through to shareholders and taxed that year |
Already Own FZROX in a Taxable Account? How to Limit the Tax Hit
You don't have to sell everything at once.
- Stop adding to FZROX. Send new money to FSKAX or VTI.
- Sell high-basis or loss lots first, using specific identification.
- Harvest losses in a down market.
- Sell in a low-income year, inside the 2027 0% band shown above.
- Give appreciated shares to charity. See whether donor-advised funds fit your giving.
- Hold until death, when heirs get a stepped-up basis.
Take step 4. Dana is single with 2027 taxable income of $40,000 before any sale. She can realize up to $11,050 of long-term gain ($51,050 minus $40,000) at a 0% federal rate, then reinvest in VTI. State tax may still apply.
Health Savings Account Triple Tax Advantage
An HSA has the best tax treatment of any account. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical costs are tax-free. For 2027, the limit is $4,500 for self-only coverage and $9,000 for family coverage, plus a $1,000 catch-up at age 55 or older, under Rev. Proc. 2026-24.
Since January 1, 2026, bronze and catastrophic marketplace plans count as HSA-eligible. People with certain direct primary care arrangements can also contribute, under Notice 2026-5. The Fidelity HSA is a brokerage account, so it can hold Zero Funds.
Some savers treat an HSA as a stealth version of their retirement accounts. They pay medical bills out of pocket and leave the HSA invested. Keep enough cash on hand to cover your deductible.
Rules for tax year 2027.
| HSA feature | Tax benefit (2027) |
|---|---|
| Contributions | Deductible; lowers this year's taxable income |
| Investment growth | Tax-free; no yearly reporting |
| Medical expense withdrawals | Tax-free at any age |
| Non-medical withdrawals after 65 | Taxed as ordinary income, like a traditional IRA |
| Non-medical withdrawals before 65 | 20% penalty plus ordinary income tax |
Comparison Tables for Decision-Making
These tables compare Zero Funds with the main alternatives. All fund data is as of the date shown and was checked on each fund company's page in November 2026.
Total Market Fund Direct Comparison
| Fund | Expense ratio (checked November 2026) |
|---|---|
| FZROX | 0.00% |
| FSKAX | 0.015% |
| VTSAX | 0.04% |
| VTI (ETF) | 0.03% |
| SWTSX | 0.03% |
| Fund | Holdings count (as of September 30, 2026) |
|---|---|
| FZROX | 2,631 |
| FSKAX | 3,791 |
| VTSAX | 3,519 |
| VTI (ETF) | 3,519 |
| SWTSX | 2,844 |
| Fund | Dividend frequency |
|---|---|
| FZROX | Annual (December) |
| FSKAX | Twice a year (April and December) |
| VTSAX | Quarterly |
| VTI (ETF) | Quarterly |
| SWTSX | Annual (December) |
| Fund | Portability |
|---|---|
| FZROX | Fidelity only |
| FSKAX | All brokers |
| VTSAX | All brokers |
| VTI (ETF) | All brokers |
| SWTSX | All brokers |
Large-Cap S&P 500 Style Fund Comparison
| Fund | Expense ratio (checked November 2026) |
|---|---|
| FNILX | 0.00% |
| FXAIX | 0.015% |
| VOO | 0.03% |
| VFIAX | 0.04% |
| SPY | 0.0945% |
Minimums as of November 2026.
| Fund | Minimum investment (2026) |
|---|---|
| FNILX | $0 |
| FXAIX | $0 |
| VOO | None (ETF) |
| VFIAX | $3,000 |
| SPY | None (ETF) |
| Fund | 3-year average annual return (as of September 30, 2026) |
|---|---|
| FNILX | 23.02% |
| FXAIX | 22.87% |
| VOO | 22.85% |
| VFIAX | 22.84% |
| SPY | 22.73% |
| Fund | Best for |
|---|---|
| FNILX | Fidelity IRAs |
| FXAIX | Portable holdings |
| VOO | Taxable accounts |
| VFIAX | Vanguard customers |
| SPY | Active traders |
International Equity Fund Comparison
| Fund | Feature details (2026) |
|---|---|
| FZILX expense ratio | 0.00% |
| FZILX small-cap coverage | No (large and mid only) |
| FZILX holdings | 2,223 stocks (as of September 30, 2026) |
| FZILX emerging markets | About 31% (as of August 31, 2026) |
| Fund | Feature details (2026) |
|---|---|
| FTIHX expense ratio | 0.06% |
| FTIHX small-cap coverage | Yes (complete) |
| FTIHX holdings | 5,072 stocks (as of September 30, 2026) |
| FTIHX emerging markets | 32.8% (as of September 30, 2026) |
| Fund | Feature details (2026) |
|---|---|
| VTIAX expense ratio | 0.09% |
| VTIAX small-cap coverage | Yes (complete) |
| VTIAX holdings | 8,901 stocks (as of September 30, 2026) |
| VTIAX emerging markets | 26.6% (as of September 30, 2026) |
| Fund | Feature details (2026) |
|---|---|
| VXUS (ETF) expense ratio | 0.05% |
| VXUS (ETF) small-cap coverage | Yes (complete) |
| VXUS (ETF) holdings | 8,901 stocks (as of September 30, 2026) |
| VXUS (ETF) emerging markets | 26.6% (as of September 30, 2026) |
Tax-Advantaged Account Suitability Matrix
| Account type | Zero Funds rating |
|---|---|
| Roth IRA | Excellent |
| Traditional IRA | Excellent |
| Rollover IRA | Excellent |
| 401(k) | Not on plan menus |
| HSA | Excellent |
| Taxable account | Poor |
| SEP IRA | Excellent |
| Account type | Primary advantage |
|---|---|
| Roth IRA | Tax-free growth with zero fees |
| Traditional IRA | Tax-deferred growth with zero fees |
| Rollover IRA | A large lump sum pays no ongoing fund fee |
| 401(k) | None; Zero Funds are not offered in 401(k) plans |
| HSA | Triple tax advantage with zero fees |
| Taxable account | Zero fees only; portability is a major drawback |
| SEP IRA | Self-employed retirement savings with zero fees |
| Account type | Key consideration |
|---|---|
| Roth IRA | Sell at any time with no tax |
| Traditional IRA | No tax on sales inside the account; RMDs start at 73, or 75 if born in 1960 or later |
| Rollover IRA | Good home for an old 401(k); no portability concern |
| 401(k) | Use low-cost plan options such as FXAIX |
| HSA | No tax on sales; keep cash for your deductible |
| Taxable account | Use portable ETFs or standard Fidelity index funds |
| SEP IRA | Same treatment as a traditional IRA for business owners |
2027 Contribution Limits for Accounts That Can Hold Zero Funds
| Account | 2027 limit |
|---|---|
| Traditional or Roth IRA | $7,500, plus $1,100 catch-up at age 50 or older |
| Roth IRA income phase-out (MAGI) | $158,000 to $173,000 single; $250,000 to $260,000 joint |
| HSA | $4,500 self-only; $9,000 family; plus $1,000 catch-up at age 55 or older |
| 401(k), for comparison only | $25,500 employee limit; Zero Funds are not available |
The IRA and 401(k) figures come from the IRS announcement for 2027. The 2026 limits still apply to contributions for tax year 2026, which you can make until the April 2027 filing deadline.
What to Do Next
- List every account that holds a Zero Fund and mark each one as an IRA, an HSA or taxable.
- In taxable accounts, turn off new purchases of Zero Funds and point new money to FSKAX or VTI.
- Check your unrealized gain and cost basis method on the Fidelity positions page before any sale.
- Compare your expected 2027 taxable income with the 0% capital gains threshold for your filing status.
- Set up automatic IRA contributions of up to $625 a month to reach the 2027 limit.
FAQs
Can I use Fidelity Zero Funds in my employer 401(k)?
No. Zero Funds are sold only to individual investors with Fidelity retail accounts. They are not on employer 401(k) plan menus, including plans Fidelity runs. Use the lowest-cost index options your plan offers.
Will FZROX underperform VTSAX long-term?
No, not so far. Over the five years ended September 30, 2026, FZROX returned 12.80% a year and VTSAX returned 12.55%. Vanguard does not publish a VTSAX return from the FZROX start date, so five years is the longest matched period. The gap could narrow or reverse.
Can I transfer Zero Funds between Fidelity accounts?
Yes, between accounts of the same type, such as from one IRA to another. Shares can't move from a taxable account into an IRA, because IRA contributions must be made in cash. The limits apply only when you move to a different broker.
Are Zero Funds actually free or do hidden costs exist?
Yes, the 0.00% expense ratio is real and audited. Fidelity covers its costs through securities lending, in-house trading and other business from customers. Trading costs inside the fund still trim returns slightly, as they do in every index fund.
Should I sell my Vanguard funds to buy Zero Funds?
No, in most cases. Selling VTSAX in a taxable account to buy FZROX can trigger a capital gains tax far larger than the fees you would save. In a retirement account, the small fee gap rarely justifies switching brokers on its own.
Do Zero Funds work for dollar-cost averaging?
Yes. There is no minimum, so you can invest any amount on a schedule. Fractional shares put your full deposit to work, whatever the share price.
Will Fidelity start charging fees for Zero Funds eventually?
Nobody knows, and Fidelity has not said it will. Any fee change would have to be disclosed to shareholders in the prospectus before it took effect. The funds bring Fidelity new customers, which gives it a reason to keep them at zero.
Can I use Zero Funds for Roth conversions?
Yes. You can convert a traditional IRA that holds Zero Funds to a Roth IRA and keep the same funds. The converted amount is taxed as ordinary income in the year of the conversion.
What happens if I inherit Zero Funds?
It depends on the account. Most non-spouse heirs must empty an inherited IRA or Roth IRA within 10 years. Shares inherited in a taxable account get a stepped-up basis, so heirs can sell with little or no gain. That largely removes the portability tax problem for them.
Are Zero Funds protected by SIPC insurance?
Yes. If a brokerage fails, the Securities Investor Protection Corporation covers up to $500,000 per customer, including up to $250,000 for cash. Fidelity also carries extra coverage with a $1 billion aggregate limit. None of this protects you against market losses.
Related reading
- Which Mutual Funds Are Not Taxable? – Avoid this Mistake + FAQs
- Do Investment Funds Pay Capital Gains Tax? (w/Examples) + FAQs
- Are Fidelity Index Funds Good? (w/Examples) + FAQs
- Which Fidelity Mutual Fund Is Best? (w/Examples) + FAQs
- What Fidelity Funds Should I Invest In? (w/Examples) + FAQs
- Are UBS Advisors Actually Better Than Fidelity? (w/Examples) + FAQs