There are so many different investment choices out there nowadays. Having to pick just a couple of accounts to meet your investment income and retirement planning goals can seem like a daunting decision. However, you can’t go wrong with low-cost, reputable investment companies, especially when it comes to index products like ETFs or index funds like the new Fidelity zero-fee index funds.
If you want to follow Warren Buffett’s advice about index funds being the best types of investments, then Fidelity’s newest zero-fee index funds are the way to go. The Fidelity Zero Total Market Index Fund and Fidelity Zero International Index Fund do not charge any management fees for investors, no matter how little or how much they invest into the account.
Fidelity is the first investment company to offer no-fee index funds, which can help new investors get started and help seasoned investors reduce how many fees they pay for portfolio management services.
Would these types of investments be a good fit for your portfolio? Let’s see if Fidelity’s zero-fee index funds are worth a shot.
Fidelity’s No-Fee Index Fund
Investing in Index Funds
Index funds are not exactly designed to bring in massive returns. Instead, they balance risks with rewards through a mutual fund that attempts to match a market index like the S&P 500.
The benefits of investing in index funds include broader market exposure, lower management fees, and lower portfolio turnover.
Index funds may seem boring in comparison to the new and unusual things you can invest in these days, but they offer significantly fewer risks than hyped-up investments like cryptocurrencies and more stable returns than the average stocks.
Zero Account Minimums
The big draw behind Fidelity’s new index funds is their “zero minimums” promise. These include zero expense ratio index funds, no minimum investment in Fidelity mutual funds, no minimums to open a self-directed brokerage account, and no account fees.
So what’s the catch? How does Fidelity benefit from offering zero-fee index funds to its customers? If your first thought was “hidden fees,” then think again.
Fidelity offers a broad range of investment products that come with their own fees and commissions, and the two zero-fee index funds they recently rolled out are likely designed to attract new customers to Fidelity. These funds are somewhat like free trial offers. If you like the product and the company, then you’ll be more likely to pay for services later on.
Of course, it’s worth noting that you’re not required to open additional fee-based Fidelity accounts to get access to the zero-fee index funds. So, it’s up to you to decide how you design your investment strategy.
Fidelity Zero Total Market Index Fund (FZROX)
The Fidelity Zero Total Market Index Fund, managed by Geode Capital Management, focuses on investments within the U.S. from a broad range of publicly traded companies.
Morningstar has categorized the fund as a Large Blend, and it is similar to other funds offered by Fidelity, such as the Large Cap Core Enhanced Index Fund (FLCEX) and Fidelity New Millennium Fund (FMILX).
Fidelity Zero International Index Fund (FZILX)
The Fidelity Zero International Index Fund is categorized as a Foreign Large Blend (Morningstar), which means the assets are spread across a variety of developed and emerging foreign stock markets.
It is similar to Goldman Sachs International Equity Insights Fund Class A (GCIAX) and ideal for investors who want broad access to international markets without taking on the considerable risks posed by investing in specific foreign sectors or a couple of foreign stock markets.
Should I Invest in Fidelity’s No-Fee Index Funds?
If you want to avoid wasting money by investing in stocks, then adding Fidelity’s no-fee index funds to your portfolio could be a great way to start saving money on account fees and further diversifying your portfolio. Signing up for an account with Fidelity takes just a few minutes, and you can start investing as soon as your fund the account!
All in all, investing in index funds is a good strategy for anyone who wants to balance risks with returns. You likely won’t make huge returns on your investments right away, but on a long enough time frame, your investments in index funds could outperform other well-known or hyped-up investments.
What have the returns been compared to Fidelity’s competitor index funds?