Fidelity Index Funds: Zero-Fee Funds and More
Fidelity is the only major firm offering index funds with a literal 0.00% expense ratio. Here's how FZROX and FNILX pull it off, the real catch, and when a 0.015% fund is actually better.
Don't have time? Here's what you need to know:
- 1Fidelity's ZERO funds (FZROX total market, FNILX large-cap) charge a literal 0.00% expense ratio — unique among major providers.
- 2The catch: ZERO funds are Fidelity-only and can't transfer in kind, so leaving could force a taxable sale in a taxable account.
- 3Conventional FXAIX (S&P 500) and FSKAX (total market) cost about 0.015% but track standard benchmarks and are portable.
- 4ZERO funds are ideal in a Fidelity IRA or 401(k); portable FXAIX/FSKAX is the safer pick for taxable accounts.
The ZERO Funds: A Genuine 0.00% Expense Ratio
Fidelity broke new ground by launching index mutual funds with a literal 0.00% expense ratio — the ZERO funds. FZROX is its total U.S. market fund and FNILX is its large-cap fund, a near-substitute for an S&P 500 fund. There is no annual management fee at all, which a few years ago would have sounded impossible. For a long-term investor, paying nothing to hold the U.S. market is a remarkable deal.
Fidelity can offer 0.00% partly as a loss-leader to attract assets and partly because the funds use Fidelity's own in-house indexes rather than licensing a name-brand index like the S&P 500, avoiding licensing fees. The result is a fund that tracks essentially the same companies as a conventional total-market or large-cap fund, but at no stated cost — the most aggressive expression yet of the long industry march toward zero.
The Catch With the ZERO Funds
The 0.00% headline comes with real fine print. The ZERO funds are Fidelity-only — they are mutual funds you can hold only in a Fidelity account, and they cannot be transferred in kind to another brokerage. If you ever move to a different broker, you would have to sell, which in a taxable account could trigger capital-gains tax. That lock-in is the price of the zero fee.
They are also mutual funds, not ETFs, so they lack an ETF's intraday trading and some of its tax-efficiency advantages in taxable accounts. And because they track Fidelity's proprietary indexes rather than the S&P 500 or a major total-market index, their holdings differ slightly from the better-known benchmarks. None of this makes them bad — for a Fidelity user in a tax-advantaged account like an IRA, the ZERO funds are close to ideal.
Important: Think twice before putting ZERO funds in a taxable account if you might ever switch brokers. You can't transfer them in kind, so leaving Fidelity could force a taxable sale.
Fidelity's Conventional Index Funds
Outside the ZERO lineup, Fidelity offers conventional index funds that track the standard benchmarks at razor-thin fees. FXAIX tracks the S&P 500 at roughly 0.015%, and FSKAX tracks the total U.S. market at a similarly tiny cost. Unlike the ZERO funds, these track the widely recognized indexes and can be held alongside the rest of the industry, making them more portable.
For many investors these conventional funds are the better default precisely because they are not locked to Fidelity. The difference between 0.00% and 0.015% is about $1.50 a year on $10,000 — a trivial amount next to the flexibility of owning a portable, standard-benchmark fund. If you want a Fidelity ETF instead, Fidelity also offers low-cost index ETFs, and any major-issuer ETF like VOO or VTI trades commission-free in a Fidelity account.
| Fund | Tracks | Expense ratio | Portable? |
|---|---|---|---|
| FZROX | Fidelity total U.S. market index | 0.00% | Fidelity only |
| FNILX | Fidelity large-cap index | 0.00% | Fidelity only |
| FXAIX | S&P 500 | ~0.015% | Standard benchmark |
| FSKAX | Total U.S. market | ~0.015% | Standard benchmark |
Want the full framework? This 2-hour ETF course teaches you exactly how to pick, buy, and hold profitable ETFs — from zero to confident investor. Under $15.
How to Choose Among Them
If you are a committed Fidelity user investing inside an IRA or 401(k), the ZERO funds are an easy win — no fee, no transferability concern because tax-advantaged accounts don't generate a taxable event when you sell. FZROX for the whole market or FNILX for large-caps gives you broad U.S. exposure at literally zero cost.
If you invest in a taxable account, or you value the freedom to move brokerages someday, the conventional FXAIX and FSKAX at around 0.015% are the more flexible choice for a few dollars a year. Either way, Fidelity's index lineup is among the cheapest in the industry, and the practical decision is portability versus a fee difference small enough to ignore in isolation.
Tip: ZERO funds shine in IRAs and 401(k)s where selling has no tax cost. In taxable accounts, the portable FXAIX or FSKAX is usually the wiser default.
Frequently Asked Questions
Are Fidelity's ZERO funds really free?
On the stated expense ratio, yes — FZROX and FNILX charge 0.00%, with no annual management fee. Fidelity offers them partly as a loss-leader to attract assets and partly because they track Fidelity's own in-house indexes, avoiding the licensing fees that come with branded benchmarks like the S&P 500. The real cost isn't a fee; it's that they're Fidelity-only.
What's the catch with FZROX and FNILX?
They can only be held at Fidelity and can't be transferred in kind to another broker. If you ever leave Fidelity, you'd have to sell, which could trigger capital-gains tax in a taxable account. They're also mutual funds tracking Fidelity's proprietary indexes rather than standard benchmarks. In a tax-advantaged account where selling is tax-free, the catch barely matters.
Should I pick FZROX or FXAIX?
FZROX is a total-market fund at 0.00% but locked to Fidelity; FXAIX is an S&P 500 fund at about 0.015% that tracks a standard benchmark and is more portable. In a Fidelity IRA, FZROX's zero fee is a clean win. In a taxable account or if you might switch brokers, FXAIX's flexibility is worth the roughly $1.50 a year per $10,000.
Further Reading
Free Tools
Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.