Fidelity ZERO expense index fund

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Posts: 178
Joined: Sat Nov 17, 2012 1:50 am
Location: Charlotte, USA

Fidelity ZERO expense index fund

Post by ether » Sun Aug 05, 2018 12:28 pm

Anyone have more details on fidelity's zero expense funds?
FZILX & FZROX are the ticker.

Does anyone know if they are mutual funds or ETF?
Anyone considering a switch to Fidelity? I like that they sell fixed income instruments for low commission
and I've read they let you get into IPO action with KKR if you have 100k in IRA and/or brokerage assets.

Just curious if anyone uses Fidelity for their IRA / brokerage and what they think about it!

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Joined: Thu Mar 31, 2011 12:55 am

Re: Fidelity ZERO expense index fund

Post by OTCW » Sun Aug 05, 2018 3:10 pm

My IRA is with fidelity. I am happy with it.

My understanding is that they are mutual funds, not ETF's. One is a total stock, and the other is international stock of some sort. I plan on looking into them and reading the small print. I currently have a vanguard total stock ETF in my IRA that I might switch from. 0.04% vs 0% won't make much difference for the amount that I hold (about $80k worth), but if they are equivalent and no small print gotchas, why not.

Mister Imperceptible
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Re: Fidelity ZERO expense index fund

Post by Mister Imperceptible » Sun Aug 05, 2018 8:35 pm

I’ll let someone else find the small print gotchas, but my too-good-to-be-true bullshit-detector tells me this means the market will soon crash.

How else do the HIGH FINANCE professionals make money? And how much of the smart money is actually sitting in a 0% fee index fund?

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Re: Fidelity ZERO expense index fund

Post by IlliniDave » Mon Aug 06, 2018 3:12 am

Fidelity administers my employer's 401k. They seem to do that pretty well. I suspect the 0% ER is a "loss leader" designed to get new clients inside the door who, once they grow more sophisticated, might purchase more profitable products and services. It's not enough of a difference to get me to take the tax hit to move my taxable assets from Vanguard.

The Old Man
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Re: Fidelity ZERO expense index fund

Post by The Old Man » Mon Aug 06, 2018 7:37 am

Vanguard 0.04% is for a consumer Admiral fund ($10K minimum balance). Institutional investors can buy at a much lower expense ratio. As IlliniDave states it is likely a "loss leader" and a relatively minor one given the alternatives available to generate customers - namely advertising. Schwab does it with their checking account/debit card which reimburses all ATM fees and does not charge any international transaction fees. For both companies it is likely these approaches are more cost effective than advertising. Also, remember that with securities lending the day when it is common for funds to have a zero expense ratio is fast approaching.

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