vtsax vs fzrox

VTSAX vs FZROX: Better Total Stock Market Index Fund? (2022)

The following guide compares two of the most popular total stock market index funds – VTSAX vs FZROX.

VTSAX and FZROX are comparable products, but there are notable differences between the two funds.

Regardless, both hold some very Undervalued Stocks that can reward investors over the long run.

Neither fund will invest in new start-ups or Penny Stocks. If that type of investing interests you, check out our list of Best Upcoming IPOs to Buy!

VTSAX vs FZROX – Full Comparison

Below you will find an in-depth comparison between VTSAX vs FZROX.

vtsax vs fzrox

VTSAX Description

Here is the VTSAX description from Vanguard’s website.

“Created in 1992, Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks.

The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency.”

Best Vanguard Index Funds

For total transparency, I am a little biased towards Vanguard because that’s where I invest most of my personal portfolio.

vtsax vs fzrox

FZROX Description

Here is the FZROX description from Fidelity’s website. This is one of the Best Fidelity Index Funds.

“The fund seeks to provide investment results that correspond to the total return of a broad range of U.S. stocks.

Normally investing at least 80% of its assets in common stocks included in the Fidelity U.S. Total Investable Market Index.”

In simple terms, FZROX is a Total Stock Market Index Fund. This means they have hypothetical exposure to every publicly traded security.

 

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VTSAX vs FZROX – Minimum Investment

VTSAX has a $3,000 minimum investment, but FZROX has no minimum investment.

Inherently, this means that FZROX is going to be more welcoming towards beginning investors.

VTSAX does have an ETF alternative with no minimum investment.

VTSAX vs VTI

It’s very common for typical index funds or mutual funds to have a minimum investment from $3,000 to $50,000.

Most people start their investing journey with no money, so FZROX is a good starting place.

VTSAX vs FZROX: Minimum Investment

VTSAX vs FZROX – Dividend Reinvestment

VTSAX and FZROX both allow automatic dividend reinvestments, contributions, and withdrawals.

This is a huge advantage that both of these funds offer by being index funds, rather than ETFs.

For example, say you received $19 in quarterly dividends. This is not enough money to purchase an entirely new share.

Well, that doesn’t matter, you can just reinvest those dividends in a partial share and walk away.

Partial share purchases and dividend reinvesting may not seem like a huge deal, but it’s so exciting.

Some of my favorite days of the year are when I receive my quarterly dividends and see them reinvested!

VTSAX vs FZROX – Custodial Provider

VTSAX is a total stock market index fund offered by Vanguard. FZROX is a total stock market index fund offered by Fidelity.

A total stock market index fund is an investment vehicle that contains a portfolio of stocks within a fund that tracks an equity index.

This essentially means VTSAX and FZROX are going to have the same level of diversification.

investment holdings

Investment Holdings

So, you may be asking, “What are the underlying holdings for VTSAX and FZROX?” Here are some of the top holdings for VTSAX:

  • Apple
  • Microsoft
  • Amazon
  • Facebook
  • Google

Here are some of the top holdings for FZROX:

  • Apple
  • Microsoft
  • Amazon
  • Facebook
  • Google

Notice anything interesting? VTSAX and FZROX have the exact same top holdings. Now, why is this?

VTSAX and FZROX are both total stock market index funds.

The largest companies are still going to be the largest underlying holdings for both funds.

VTSAX Pros

VTSAX has been a flagship fund with Vanguard for decades now. Here are some of the best perks!

  • Vanguard Product
  • Broad Diversification
  • Low Turnover
  • Tax-Efficient
  • Fractional Share Purchases

First, as I mentioned in a couple of paragraphs above, I am biased towards Vanguard because I love its mission.

The VTSAX fund mission literally states the fund’s key attributes are its low cost and tax efficiency.

Jack Bogle built Vanguard around these two principles because they help investors boost their long-term returns.

Secondly, VTSAX offers extremely broad diversification,  including small-, mid-, and large-cap growth and value stocks.

This is not the sort of diversification you can receive by simply investing in the S&P 500.

  • Vanguard – S&P 500 Index Fund – VFIAX
  • Fidelity – S&P 500 Index Fund – FXAIX

Additionally, by keeping the fund turnover so low, VTSAX is very tax-efficient.

This is because capital gains are only generated by selling appreciated securities.

If you don’t sell, you won’t have capital gains.

Lastly, VTSAX allows investors to always reinvest their dividends for more compounding interest and purchase fractional shares.

VTSAX Cons

Here are a couple of downsides to investing in VTSAX.

  • 0.04% Expense Ratio
  • $3,000 Minimum Investment
  • No Intraday Trading

Unfortunately, VTSAX is not a 0% expense ratio fund like FZROX.

These extra four basis points are not going to doom your retirement plan, but I always prefer to pick funds with lower expense ratios.

It is true that the 0% expense ratio for FZROX was a marketing gimmick, and it may go away with time.

We will keep you up-to-date if anything changes, but that’s not the case for now.

Next, VTSAX does have a $3,000 minimum investment, which acts as a big barrier to entry for new investors.

Lastly, because VTSAX is an index fund, there is no intraday trading or real-time pricing.

If you want to start day trading securities, do not invest in VTSAX.

Personally, we do not recommend day trading, and there’s a reason the Best Investors Are Dead.

Dead investors never sell their investments; they just sit in their account for eternity, earning compounding interest.

pros and cons

FZROX Pros

FZROX has quickly become one of Fidelity’s top funds in recent years. Here are a few of my favorite things about FZROX.

  • Fidelity Product
  • 0% Expense Ratio
  • Broad Diversification
  • No Minimum Investment
  • Partial Share Purchases

While Vanguard is my personal favorite investment company, Fidelity is a close second.

Fidelity has an excellent website and mobile app that provides a great user experience.

It’s almost too easy to buy and sell securities!

Next, FZROX was included in Fidelity’s launch of their Zero Expense Ratio Index Funds.

This also includes the following Fidelity products:

A 0% expense ratio is unheard of in the financial world, and there are still mutual funds that charge above 1%.

Keeping your investing fees low is a great way to enhance your long-term, compounded returns.

Next, FZROX, unlike VTSAX, has no minimum investment, so it’s more friendly towards beginners.

You can start investing today if you don’t have a large capital balance!

Finally, FZROX always allows dividend reinvestments and partial share purchases.

FZROX Cons

Here are a couple of downsides to investing in FZROX.

  • Volatility
  • No Real-Time Pricing

Investing in the stock market is inherently more volatile than investing in bonds or CDs.

Most financial advisors recommend allocating your portfolio towards more safe investments as you age.

Historically, FZROX has had periods where its returns have fallen by more than 30%.

It’s not typical, but there is a lot of risk in owning equities during retirement.

Also, FZROX does not allow intraday trading or real-time pricing.

Thus, investors will not see their account balance change during the day, and trades are executed after market close.

other fund comparisons

Other Fund Comparisons

I  have written many other investment fund comparison reviews. I highly recommend reading any of the following for more information.

For more investing information, I suggest subscribing to the Wall Street Journal. They have tremendous information and reporting!

VTSAX and FZROX

VTSAX and FZROX are both total stock market index funds. The biggest differences are expense ratios, minimum investments, and custodial providers.

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VTSAX vs FZROX FAQ

What’s the difference between VTSAX and FZROX?

VTSAX is a total stock market index fund offered by Vanguard, and FZROX is a total stock market index fund offered by Fidelity.

Is VTSAX or FZROX better?

FZROX offers a lower expense ratio than VTSAX. The returns will be comparable.

What are the holdings of VTSAX and FZROX?

VTSAX and FZROX both track the total stock market.

How do I buy VTSAX or FZROX?

You can buy VTSAX or FZROX on any brokerage website. I prefer to use Vanguard or Fidelity.