S&P 500 or the Whole Market, and the Zero-Fee Catch

FXAIX and FZROX are two of Fidelity’s most popular index funds, and they differ in two ways that matter. FXAIX tracks the S&P 500, the roughly 500 largest US companies, for a fee of 0.015% a year, while FZROX holds the entire US stock market for no fee at all. The catch is that FZROX can only be held at Fidelity, while FXAIX can generally be moved to another broker.

The fee difference is far smaller than most people think. FRC’s calculations show that from 2019 to 2025, FXAIX actually finished ahead of FZROX, despite charging a fee, because large companies outperformed smaller ones over that period.

So the real choice is not about cost. It comes down to how much of the market you want to own, which account you are investing through, and whether you are sure you will always stay with Fidelity.

Start Here: Learn to Choose Funds With Confidence

Financial Regulation Courses (FRC) has no relationship with Fidelity and no stake in what you buy. FRC sells no investments, manages no money and earns no commission, so this comparison is explained impartially.

ETF Investing for Beginners explains how index funds and ETFs work, what they cost and how to compare them. ETF Investing Strategies teaches you to build a complete portfolio around funds like these, and Advanced ETF Investing covers rebalancing, tax placement and risk in depth.

FRC’s programs and memberships are open to everyone. Every chapter ends with an assessment you must pass before moving on, and FRC’s AI teachers present video lessons in the FRC dictionary, each reviewed by qualified finance and compliance professionals before it is published.

FXAIX vs FZROX at a Glance

Both are mutual funds, not ETFs, and both trade once a day at the price set after the market closes. FRC’s guide to Fidelity index funds compares these two with FNILX and FSKAX, Fidelity’s other two core index funds.

What FXAIX Holds

FXAIX tracks the S&P 500, an index of around 500 of the largest US companies chosen by an independent committee. These are the household names across technology, healthcare, finance and consumer goods.

Because the index is weighted by company size, the largest firms make up a large share of the fund. The S&P 500 covers roughly 80% of the value of the US stock market, so FXAIX gives you most of the market’s weight in one holding.

FXAIX follows an independent, widely used index licensed from an outside provider. That is part of the reason it can generally be transferred to other brokers, and it is the same index tracked by the most popular S&P 500 ETFs.

What FZROX Holds

FZROX goes wider. It holds the large companies in the S&P 500 plus thousands of mid-sized and smaller US companies, giving you almost the entire US stock market in one fund.

It follows Fidelity’s own index, built in-house rather than licensed from an outside provider. Because Fidelity pays no licensing fee to an index company, that is one reason it can offer the fund with no expense ratio, and it is part of the reason the fund is restricted to Fidelity accounts.

Because the market is weighted by size, the large companies in FXAIX still make up most of FZROX’s value. The two funds overlap heavily, and the smaller companies are the only part FZROX adds.

Year-by-Year Returns

FRC compared the calendar-year total returns of both funds, with dividends reinvested, for every full year since FZROX launched.

FXAIX finished ahead in six of the seven full years. FZROX’s one clear win came in 2020, when smaller companies rebounded sharply in the second half of the year after the COVID crash.

The differences are small in most years, because the funds share most of their holdings. The gap each year mostly reflects how smaller US companies performed compared with the largest ones.

How Closely Do They Move Together?

FRC measured how closely the two funds’ yearly returns moved together from 2019 to 2025. The correlation was about 0.996, where 1.0 would mean the two moved in perfect lockstep.

In plain terms, when one fund has a good year, so does the other, and when one falls, the other falls too. The average gap between them was about 1.1 percentage points a year.

Small yearly gaps add up, though. Over the five years from 2021 to 2025, FXAIX gained about 96.0% in total, while FZROX gained about 86.7%, a difference of more than 9 percentage points driven almost entirely by large companies outpacing smaller ones.

What $10,000 Became

Over those seven years, $10,000 in FXAIX finished about $1,020 ahead of the same amount in FZROX. FZROX charged nothing, but its wider holdings meant it owned more of the smaller companies that lagged the giants over that period.

That result will not hold in every period. There have been long stretches, such as the early 2000s, when smaller US companies outperformed the largest ones, and in those periods a total market fund would be expected to lead.

The Fee Difference in Dollars

An expense ratio is taken from the fund’s assets each year, so you never see a bill, but it reduces your return. FXAIX’s 0.015% works out to about $1.50 a year on $10,000, $15 a year on $100,000 and $75 a year on $500,000.

Over 30 years, the fee costs a few thousand dollars on a large balance. That is real money, but in FRC’s data the difference in what each fund holds moved results by more than this in a single year.

The fee should be one of the last things that decides this choice. What you own, and where you hold it, count for far more.

The Fidelity-Only Catch

FZROX can only be held in a Fidelity account. If you ever move your money to another broker, you cannot transfer FZROX across, so you would have to sell it first and move the cash.

In a retirement account, such as an IRA, selling usually creates no tax bill. In a taxable brokerage account, however, selling can trigger capital gains tax on all the growth.

FRC worked through a simple example. An investor who has turned $50,000 into $100,000 in FZROX in a taxable account, and pays 15% long-term capital gains tax, would owe about $7,500 to leave Fidelity.

That is the same as 500 years of FXAIX’s fee on a $100,000 balance. FXAIX can generally be moved to another broker in kind, without selling, so it avoids that bill entirely.

Which Account Are You Using?

The account you invest through can change the answer. In an IRA or other retirement account, selling FZROX to move providers does not usually create tax, so the Fidelity-only restriction matters much less.

In a taxable account, the restriction carries real weight, and so does tax efficiency. Both funds are mutual funds, which can occasionally distribute capital gains that are taxed even if you did not sell anything.

ETFs can usually avoid most of those distributions because of the way they create and redeem shares. For a taxable account, an S&P 500 or total market ETF can be a more tax-efficient way to get the same exposure, and FRC’s guide to where to hold ETFs explains which funds suit which accounts.

A Worked Example

Imagine an investor opening a Roth IRA at Fidelity who wants the whole US market and plans to stay for years. FZROX fits that plan well: it covers the entire market at no cost, and if they ever left, selling inside the Roth would not trigger tax.

Now imagine the same investor opening a taxable account, unsure whether they will stay with Fidelity long term. Here FXAIX, or an S&P 500 or total market ETF, may suit better, because it can be moved without selling.

Same investor, same goal, different account, different answer. The account you use matters as much as the fund you choose.

S&P 500 or Total Market: The Real Decision

Once the account question is settled, the remaining question is how much of the market you want. The S&P 500 gives you the largest US companies, while a total market fund adds mid-sized and smaller ones.

Supporters of the total market approach argue that owning everything is the purest form of diversification. Supporters of the S&P 500 argue that the largest companies already make up most of the market, and that adding small companies changes results only slightly.

Both views are reasonable, and over long periods the two approaches have produced similar results. FRC’s comparison of VOO vs VTI looks at the same choice using the two most popular ETFs.

Which One Fits Your Situation?

These are starting points, not recommendations. Your own tax position, plans and other holdings all shape the right answer.

The Other Fidelity ZERO Funds

FZROX is one of four ZERO index funds Fidelity launched from 2018 onwards. All four charge no expense ratio, have no minimum and can only be held at Fidelity.

No ZERO fund is best for everyone, because each one covers a different part of the market. The same trade-off applies to all four: no fee, in exchange for being tied to Fidelity.

Can You Own Both?

You can, but it adds little. Because the S&P 500 companies already make up most of a total market fund, owning FXAIX and FZROX together means owning the same large companies twice.

If you want to spread your risk further, international stocks or bonds add something these two funds do not. A simple mix of a US fund, an international fund and a bond fund is the idea behind the three-fund portfolio.

For investors already using FZROX, FZILX is the natural international partner, with the same zero fee and the same Fidelity-only restriction. For investors using FXAIX, a conventional international index fund or ETF keeps the whole portfolio portable.

Dividends and Distributions

Both funds pass on the dividends paid by the companies they hold. FXAIX generally pays dividends quarterly, while FZROX generally pays once a year, in December.

Inside a retirement account, the timing makes no difference, because nothing is taxed each year. In a taxable account, the dividends are taxable in the year they are paid, whether you reinvest them or not.

Most investors reinvest the dividends automatically. Over time, that reinvestment is a large part of the total return shown in the tables above.

What If You Don’t Invest at Fidelity?

If your account is at another broker, you cannot buy FZROX, and holding FXAIX outside Fidelity may involve a transaction fee. Many investors at other firms use an S&P 500 or total market ETF instead, which can be bought at almost any broker and moved freely.

FRC’s VOO performance history and VTI performance history show how S&P 500 and total market ETFs have performed in every year since they launched, through every crash and recovery.

The idea behind them is the same as FXAIX and FZROX. Only the structure and where you can hold them differ.

How Safe Are These Funds?

The stocks inside both funds belong to the fund and its shareholders, and are held by a custodian rather than on Fidelity’s own balance sheet. If Fidelity itself ran into trouble, the fund’s assets would not be used to pay its debts.

Your brokerage account has its own layers of protection, which FRC’s guide to whether Fidelity is safe explains in full. None of these protections cover market losses.

Both funds rise and fall with the US stock market. In early 2020, both fell by around a third in a matter of weeks before recovering within months.

Questions People Ask

Is FXAIX or FZROX better? Neither is better in general. FXAIX tracks the S&P 500 for a tiny fee and can be moved to other brokers, while FZROX holds the whole US market for no fee but can only be held at Fidelity.

Why did FXAIX beat FZROX if FZROX has no fee? Because large companies outperformed smaller ones over most of the period since FZROX launched. The difference in what each fund holds mattered far more than the 0.015% fee.

Can I transfer FZROX to another broker? No. FZROX can only be held at Fidelity, so you would need to sell it before moving your account, which can create a tax bill in a taxable account.

Is FZROX a good fund for a Roth IRA? It can be, especially if you plan to stay with Fidelity. Selling inside a Roth IRA does not create tax, so the Fidelity-only restriction matters less there.

Does FZROX include the S&P 500? Yes. FZROX holds the large companies in the S&P 500 plus thousands of smaller ones, so most of its value sits in the same companies as FXAIX.

Should I hold FXAIX and FZROX together? Usually there is little benefit, because they overlap heavily. International stocks or bonds add more variety to a portfolio than a second US fund.

Is FXAIX an ETF? No. FXAIX and FZROX are both mutual funds, which trade once a day at the closing price rather than throughout the day like ETFs.

Are FXAIX and FZROX tax-efficient? Both have low turnover, which keeps taxable distributions down, but mutual funds can occasionally distribute capital gains. In a taxable account, an ETF tracking the same market is often more tax-efficient.

Is FXAIX the same as VOO? They track the same index, the S&P 500, so their returns are very close. FXAIX is a Fidelity mutual fund, while VOO is an ETF that can be bought at almost any broker.

Which Fidelity ZERO fund is best? It depends on what you want to own. FZROX covers the whole US market, FNILX the largest companies, FZIPX the smaller ones and FZILX international stocks, and all four can only be held at Fidelity.

Is FXAIX the same as the S&P 500? FXAIX tracks the S&P 500 very closely, so its returns are almost identical to the index each year. The small difference comes from the fund’s fee and the costs of running it.

Is FXAIX or FNILX better? Both hold large US companies and have performed very similarly. FXAIX follows the official S&P 500 and is portable, while FNILX follows Fidelity’s own large cap index at no cost and can only be held at Fidelity.

Which Fidelity funds outperform the S&P 500? Index funds are designed to match a market, not beat it, and most actively managed funds have trailed the S&P 500 over long periods. In FRC’s data, even Fidelity’s own total market fund, FZROX, finished behind FXAIX from 2019 to 2025.

What is the minimum investment for FXAIX and FZROX? Neither fund has a minimum, so you can start with any amount and invest exact dollar sums automatically.

The Bottom Line

FXAIX and FZROX both give you low-cost exposure to US stocks, and their returns have been close. FXAIX holds the S&P 500, can generally be moved to another broker and charges 0.015%, while FZROX holds the whole market, charges nothing and must stay at Fidelity.

In FRC’s data, the fee barely mattered and FXAIX finished ahead, so choose on what you want to own and where you hold it. To build a complete portfolio around funds like these, learn step by step with ETF Investing for Beginners, ETF Investing Strategies and Advanced ETF Investing.