Investing in index funds has become increasingly popular among individual investors seeking exposure to the broader stock market. If you're having trouble choosing between FSKAX vs. FZROX, here's how to know the similarities and differences between the two index funds.
When you invest in a total stock market index fund, such as FSKAX or FZROX, you are adding exposure to the entire U.S. equity market to your investment portfolio. These funds aim to replicate the performance of a broad market index, providing investors with diversified holdings across various sectors and market capitalizations.
One notable index fund is the Fidelity ZERO Total Stock Market Fund (FZROX), which was the first fee-free fund in the marketplace. Launched in 2018, it has quickly gained popularity and currently holds close to $6 billion in assets. This fund offers investors the opportunity to invest in the total U.S. stock market without paying any expense ratio.
However, Vanguard's total market ETF (FSKAX) is another compelling option for investors. It also provides exposure to the entire U.S. equity market, but with a slightly different approach. FSKAX is an exchange-traded fund (ETF) with a low expense ratio, making it an attractive choice for cost-conscious investors.
If you are looking for high diversification and low fees, both FSKAX and FZROX could be suitable options. Fidelity Investments, the provider of FZROX, offers a broad array of mutual fund choices, including a variety of ultra-low-cost options. This gives investors the flexibility to choose a fund that aligns with their investment goals and risk tolerance.
Fidelity's decision to introduce zero-fee index funds caused a significant impact in the industry, often referred to as the "fee war." With this move, paying excessive fees for a broad-market index fund seems unnecessary. Investors now have access to low-cost options that can help maximize their returns over the long term.
It is important to note that while FSKAX and FZROX have no expense ratio, other costs may still be associated with these funds. These index funds and ETFs are not tied to one brokerage platform, allowing investors the freedom to choose the platform that suits their needs and preferences.
In conclusion, FSKAX and FZROX are both attractive options for investors seeking exposure to the entire U.S. equity market. With their low fees and broad diversification, these index funds offer a cost-effective way to participate in stock market growth. Whether you choose FSKAX or FZROX, it ultimately depends on your investment objectives, risk tolerance, and preferences. Conducting thorough research and consulting with a financial advisor can help you make an informed decision that aligns with your financial goals.
