What Fidelity's ZERO Funds Save, and What You Give Up

Free Funds With Two Trade-offs

Fidelity’s ZERO funds (FZROX, FZILX, FNILX) are among the most recommended funds on Reddit and YouTube. They charge 0.00% in expense ratios, so the obvious question is why anyone would pay Vanguard 0.03% for VTI.

The funds are fine. They are not scams or traps, and they are reasonable holdings for many investors. The zero fee comes with two trade-offs. Each fund tracks an index Fidelity builds itself, which holds fewer stocks than the usual alternatives. And the funds can generally be held only in a Fidelity account. The first has cut both ways for returns. The second matters only if you might move a taxable account away from Fidelity.

Fidelity’s Own, Narrower Indexes

The ZERO funds do not track the same indexes as VTI, VXUS or the S&P 500. They track Fidelity’s own indexes, and each holds fewer stocks than the alternative.

Holdings data from Fidelity Fund Research and Vanguard (March 31, 2026). FZROX tracks Fidelity’s U.S. Total Investable Market Index. VTI and VTSAX track the Morningstar US Total Market Index, which includes micro-caps.

For U.S. stocks the gap in holdings is large and the gap in market value is small. Fidelity’s U.S. index starts from the largest 3,000 companies and then screens out the least liquid. On August 31, 2026, the 862 smallest companies in VTSAX, the ones ranked below the number FZROX held, made up 0.08% of the fund, and the two funds overlapped 98.6% by weight. Our three-way comparison of VTSAX, FZROX and FSKAX has the details.

The international gap is larger in kind. FZILX holds 2,179 stocks and VXUS holds 8,862. Fidelity’s index methodology selects “the top 90% of stocks by market cap within each country” and describes the index as large and mid cap, so FZILX leaves out the international small caps that VXUS includes.

The Fee Savings Are Small

FZROX charges 0.00% and VTI 0.03%, a difference of $30 a year on $100,000. Against VTSAX, at 0.04%, it is $40. Over 25 years with contributions, that adds up to a few hundred to a few thousand dollars. It is real money, and it is small next to how far the indexes themselves have drifted apart.

Index Differences Have Cut Both Ways

Over the five years ending September 30, 2026:

Summitward calculation from month-end total-return prices, September 30, 2021 to September 30, 2026, net of each fund’s fees; script and data.

Two of the three ZERO funds beat their alternatives over these five years and one trailed. Each gap is several times the fee difference, so the indexes set the direction, and nothing in the record says which way the next five years will go. FZROX’s lead has been the most consistent: in the seven calendar years from 2019 through 2025 it beat VTSAX in six, by 0.12 to 0.35 points, and trailed by 0.49 points in 2020. Since its August 2018 launch it has returned about 0.14 points a year more than both VTSAX and FSKAX. That is evidence in FZROX’s favor so far, and eight years is too short to call it a lasting edge.

See It for Yourself

The calculator below sets a fee difference against a gap in index returns. Set the index gap to a positive number to see the ZERO fund coming out ahead, or a negative one to see it falling behind; the record above has both.

For quick head-to-heads on the exact pairings, see VTSAX vs FZROX vs FSKAX, FZROX vs VTI, FZROX vs VTSAX, and VTI vs VTSAX.

What You Give Up

• An outside index provider. VTI and VTSAX track the Morningstar US Total Market Index, built by the Center for Research in Security Prices and owned by Morningstar since it acquired CRSP in February 2026. FSKAX tracks a Dow Jones index from S&P Dow Jones Indices. FZROX tracks an index built by a Fidelity affiliate. Fidelity publishes the rules; the difference is that the fund company and the index provider are the same firm.
• Market completeness. FZROX holds about 2,700 stocks, VTI about 3,500. The extra names are a small share of U.S. market value. Internationally the gap is larger: FZILX leaves out small caps that VXUS holds.
• Portability. FZROX’s prospectus makes shares available “only to individual retail investors who purchase their shares through a Fidelity brokerage account,” plus certain broker-dealers with Fidelity arrangements. If you move a taxable account to another broker, you may have to sell, and selling realizes your gains. VTI and VXUS are ETFs that transfer in kind to any brokerage.

When ZERO Funds Make Sense

• Your money is in a Fidelity IRA, Roth IRA or HSA. If you leave Fidelity, you can sell inside the account without tax.
• You are at Fidelity and plan to stay. The portability issue does not apply.
• You are investing small amounts. On a $5,000 portfolio, 3 basis points is $1.50 a year, and the ZERO funds have no minimum.
• You accept the index trade-off. You are buying a slightly narrower market proxy in exchange for no fee.

When Another Fund Fits Better

• You want the broadest market coverage. VTI, VXUS and VT hold more of the market, especially outside the U.S.
• You may move a taxable account. FSKAX, VTI or another total-market fund keeps that option open. Owning ZERO funds in a taxable account means selling them, with tax on the gains, if you leave.
• You want an index run by an outside provider. FSKAX and FXAIX are Fidelity funds that track Dow Jones and S&P indexes for 0.015%.

Where the Fee Fits

For a core index fund, the goal is to own the market you intend to own, with as little avoidable drag as possible. That means checking two layers:

1. The index: What market does it define? How complete is the coverage? Who maintains the rules?
2. Implementation drag: Fees, trading costs, cash drag, securities lending revenue, taxes, and sampling.

Once fees fall below a few basis points, the index and the account you hold the fund in usually move your result more than the fee does. The index effect can go in either direction; the ZERO funds have shown both.

As Robertson’s research shows, index investing delegates management to the index creator. The ZERO funds delegate to Fidelity’s index team. VTI delegates to Morningstar. Both are active choices. See the Passive Investing guide for the full framework.

Frequently Asked Questions

Are Fidelity ZERO funds bad?

No. They are fine investments, and FZROX has beaten VTSAX and FSKAX since its 2018 launch. A 0.00% fee is a reasonable reason to choose one in a Fidelity retirement account. In a taxable account, weigh the fee against the chance you will move brokers.

Is FZROX the same as VTI?

No. FZROX tracks Fidelity’s U.S. Total Investable Market Index (about 2,700 holdings). VTI tracks the Morningstar US Total Market Index (about 3,500 holdings, including micro-caps). Their exposures are very similar; their monthly returns since 2018 have been more than 0.9999 correlated.

How much do I actually save with zero fees vs. 0.03%?

On a $100,000 portfolio, $30 a year. On $500,000, $150 a year. Over 25 years with contributions, the total is a few hundred to a few thousand dollars. Differences between the indexes have moved returns by more than that in individual years, in both directions.

Can I transfer ZERO funds to another brokerage?

Generally not. The prospectus limits ZERO fund shares to Fidelity brokerage accounts and certain broker-dealers with Fidelity arrangements. If you move to a broker outside that group, you will usually have to sell, which in a taxable account realizes your gains. You can also keep a Fidelity account open just for the ZERO fund shares. ETFs like VTI and VXUS transfer in kind to any brokerage.

Do ZERO funds underperform VTI?

Not consistently. Over the five years to September 2026, FZROX beat VTSAX by 0.24 points a year and FZILX beat VTIAX by 0.67, while FNILX trailed FXAIX by 0.29. The gaps come from the different indexes and can reverse.

Key Takeaways

• Fidelity ZERO funds are fine investments. There is no evidence they are categorically better or worse than VTI, VXUS, or their Fidelity non-ZERO counterparts.
• The fee savings are 3 to 4 basis points against VTI or VTSAX: $30 to $40 a year per $100,000.
• The indexes are narrower. FZROX holds about 900 fewer U.S. stocks than VTSAX; VTSAX’s 862 smallest holdings made up 0.08% of the fund on August 31, 2026. FZILX leaves out international small caps.
• Index differences have cut both ways. Over five years to September 2026, two ZERO funds beat their alternatives and one trailed, each by more than the fee gap.
• Portability is the main cost in a taxable account. ZERO funds generally stay at Fidelity. In an IRA, Roth IRA or HSA, that costs nothing.

Related Guides

• VTSAX vs FZROX vs FSKAX compares all three total-market funds on returns, holdings, taxes and portability.
• FSKAX vs FZROX covers the choice between Fidelity’s two total-market funds by account type.
• Should You Switch to the Cheaper Index Fund? works through the after-tax math of selling one index fund to buy another.
• The S&P 500 Is Passive for You, But Not Under the Hood covers how benchmark design and committee governance shape what an index fund owns.
• Passive Investing Is a Label covers the broader framework on where discretion lives in index investing.
• The Case for Global Diversification covers why FZILX’s narrower international coverage matters.
• The Tech Bro Portfolio is another case where fund selection decisions matter more than investors think.
• Dividends Are Not Free Money is another common misconception about what drives returns.