FSKAX vs. FZROX: Which Fund Offers Better Returns? 

Determining which fund gives you the best returns on your money can be daunting, especially with so many available options. But don’t worry, because understanding the difference between Funds and Exchange Traded Funds (ETFs) is key to making an informed decision. Regarding conservative portfolio investing, FSKAX and FZROX are two of the most popular funds offering great returns. In this blog post, we take a deep dive into both funds and compare them side by side to learn which one offers better returns for investors like you!

What Is FSKAX?

The FSKAX ticker symbol represents the Fidelity Total Market Index Fund, which is a mutual fund offered by Fidelity Investments. This fund aims to match the total return performance of the entire U.S. stock market, as measured by the Dow Jones U.S. Total Stock Market Index. The FSKAX fund invests in diverse stocks across various sectors and industries, including large-cap, mid-cap, and small-cap companies. Since it’s a passive index fund, it seeks to replicate the performance of its benchmark index with a low expense ratio. Here are some of its advantages and disadvantages:

Pros of FSKAX:

• Diversification: Investors can benefit from FSKAX by accessing diverse stocks from different sectors and industries. This can help to reduce risk and potentially provide more dependable returns in the long run.
• Low expense ratio: Compared to other actively managed mutual funds, FSKAX has a low expense ratio which can lower costs and potentially increase returns for investors.
• Passive management: FSKAX is a passive index fund that tries to mimic the performance of a benchmark index. This can be advantageous for investors who want to gain exposure to the overall market without the potential risks of active management.
• Accessibility: Fidelity Investments is a reputable investment firm that offers FSKAX, a range of investment options to investors of all levels.

Cons of FSKAX:

• Limited flexibility: If you want more control over your portfolio, FSKAX may not be the best choice for you, as it is created to follow its benchmark index and cannot offer active management or individual stock selection.
• Market risk: Just like any other stock market investment, FSKAX is not immune to the risks of the market and may face losses or be impacted by market fluctuations.
• No guaranteed returns: Investors should be aware that FSKAX, like any investment, carries a risk of not providing a guaranteed return, and they may experience losses if the market performs poorly.
• Overlap with other investments: If the investor has already invested in the same stocks that are in FSKAX through other means, there is a possibility that their portfolio may have an overlap, leading to an increased risk of concentrated holdings.

What Is FZROX?

FZROX is a mutual fund offered by Fidelity Investments, with the ticker symbol for the Fidelity ZERO Total Market Index Fund. This is one of the ZERO series of mutual funds by Fidelity, designed to offer investors low-cost access to a varied portfolio of bonds and stocks. FZROX’sFZROX’ss to track the entirety of the U.S. stock market using the Fidelity U.S. Total Investable Market Index as a measure. Like other index funds, FZROX aims to imitate the performance of its benchmark index while maintaining a low expense ratio. Here are some of its advantages and disadvantages:

Pros of FZROX:

• Diversification: Investing in FZROX can offer a diverse portfolio of stocks from various sectors and industries. This can help reduce risk and potentially lead to more consistent returns over a long period.
• Low expense ratio: Investors in FZROX do not have to pay any expense ratio, so they can enjoy the returns from the underlying stocks without any fees charged by the fund.
• Passive management: FZROX is a passive index fund that tries to mimic the performance of its benchmark index. This can be advantageous for investors who want to gain extensive market coverage without the hazards of active management.
• Accessibility: Fidelity Investments, a reputable investment firm, offers FZROX as one of its investment options for investors of all levels.

Cons of FZROX:

• Limited flexibility: Investors who prefer more control over their portfolios may not find FZROX suitable as it is designed to track its benchmark index and does not allow for active management or individual stock selection.
• Market risk: Investing in FZROX, just like any other stock market investment, carries the risk of market fluctuations and can result in losses during a market decline.
• No guaranteed returns: Investing in FZROX, just like any other investment, does not offer a guaranteed return on investment. If the market does not perform well, investors may lose their money.
• Lack of track record: Investors may find it challenging to assess the potential long-term returns of FZROX because the fund was only launched in 2018 and has a short performance history.

Comparing FSKAX and FZROX: Which Is More Suitable for You?

Deciding between FSKAX and FZROX depends on your investment goals and preferences. Consider these factors before choosing the most suitable fund for you.

1. Expense Ratio: If you want to minimize the costs, you should know that FZROX has absolutely no expense ratio, whereas FSKAX has a low expense ratio. Therefore, FZROX could be a more suitable option for you in terms of reducing expenses.
2. Diversification: With both funds, investors can gain exposure to a wide range of stocks from different sectors and industries. Therefore, diversification should not be the deciding factor.
3. Investment Horizon: If you’re you’re for broad market exposure as a long-term investor and can handle market volatility, either fund could work for you. But if you prefer lower risk as a short-term investor, FSKAX might be a better choice because it has a more established performance history.
4. Investment Philosophy: FZROX is an index fund that does not involve active management, whereas FSKAX may include active management. If you do not want to invest extensively, FZROX could be a more suitable choice. On the other hand, if you prefer a more active investment strategy, FSKAX could be a better fit for you.
5. Investment Firm: Fidelity Investments, a well-known investment firm, offers both funds. If you already have an account with Fidelity, investing in either of these funds could be simpler.

Ultimately, deciding between FSKAX and FZROX will depend on your personal investment objectives, how much risk you are willing to take, and your investment principles. You may find it helpful to seek advice from a financial advisor or conduct additional research to determine which fund is more appropriate for you.

Final Verdict:

To summarise, Fidelity Investments offers two mutual funds called FSKAX and FZROX. Their main differences are their expense ratio, investment philosophy, and track record. FZROX has a zero-expense ratio which may make it more appealing to those who want to keep costs low. However, FSKAX has a longer track record of successful performance, which may make it a better fit for investors who prefer a more active approach and are risk-averse. To decide which fund suits your needs, consider your investment goals, risk tolerance, and investment philosophy. You may want to talk to a financial advisor or do more research before deciding.