Fidelity Zero Funds

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OldSport
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Fidelity Zero Funds

Post by OldSport » Sat Jan 12, 2019 6:28 pm

Are Fidelity Zero Funds any good? Do they track the same or different indexes as their similarly named index funds?

Silk McCue
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Re: Fidelity Zero Funds

Post by Silk McCue » Sat Jan 12, 2019 8:14 pm

Lots of posts on this topic since the zero funds came out. I recommend doing a search on this site for this answer. I

Cheers

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OldSport
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Re: Fidelity Zero Funds

Post by OldSport » Sun Jan 13, 2019 12:03 am

I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 12:52 am

OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
That seems to be the case. Here's the prospectus for "Fidelity ZERO Total Market Index Fund". Here's what it says:
Prospectus wrote:
  • Normally investing at least 80% of its assets in common stocks included in the Fidelity U.S. Total Investable Market IndexSM, which is a float-adjusted market capitalization-weighted index designed to reflect the performance of the U.S. equity market, including large-, mid- and small capitalization stocks.
  • Using statistical sampling techniques based on such factors as capitalization, industry exposures, dividend yield, price/earnings (P/E) ratio, price/book (P/B) ratio, and earnings growth to attempt to replicate the returns of the Fidelity U.S. Total Investable Market IndexSM using a smaller number of securities.
I'm not sure how much I trust Fidelity to design an index, or to prioritize the needs of the investor above their own. I see a potential conflict of interest. They could make choices with the index that reduce their costs but are not necessarily beneficial to the investor. And if they basically define the index as "whatever we decided to put in this fund", they can report an artificially low tracking error.

If you plan to hold the index fund in a taxable account, I would highlight that the tax efficiency of the fund is far more important than the expense ratio. Every year @triceratop posts a tax efficiency spreadsheet. For an index fund like Vanguard's Total Stock Market index fund, the expense ratio is 0.04% and the cost of taxes is 0.39%. If it turns out that Fidelity's ZERO funds are less tax efficient, they could easily end up costing more than another fund.

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Re: Fidelity Zero Funds

Post by HEDGEFUNDIE » Sun Jan 13, 2019 1:27 am

danielc wrote:
Sun Jan 13, 2019 12:52 am
OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
That seems to be the case. Here's the prospectus for "Fidelity ZERO Total Market Index Fund". Here's what it says:
Prospectus wrote:
  • Normally investing at least 80% of its assets in common stocks included in the Fidelity U.S. Total Investable Market IndexSM, which is a float-adjusted market capitalization-weighted index designed to reflect the performance of the U.S. equity market, including large-, mid- and small capitalization stocks.
  • Using statistical sampling techniques based on such factors as capitalization, industry exposures, dividend yield, price/earnings (P/E) ratio, price/book (P/B) ratio, and earnings growth to attempt to replicate the returns of the Fidelity U.S. Total Investable Market IndexSM using a smaller number of securities.
I'm not sure how much I trust Fidelity to design an index, or to prioritize the needs of the investor above their own. I see a potential conflict of interest. They could make choices with the index that reduce their costs but are not necessarily beneficial to the investor. And if they basically define the index as "whatever we decided to put in this fund", they can report an artificially low tracking error.

If you plan to hold the index fund in a taxable account, I would highlight that the tax efficiency of the fund is far more important than the expense ratio. Every year @triceratop posts a tax efficiency spreadsheet. For an index fund like Vanguard's Total Stock Market index fund, the expense ratio is 0.04% and the cost of taxes is 0.39%. If it turns out that Fidelity's ZERO funds are less tax efficient, they could easily end up costing more than another fund.
The “80%” language is standard legalese that you will find in many index funds. Google that phrase and you will see it everywhere. It’s included because fund managers need to hold some cash and just in case there are temporary liquidity issues with tracking some stocks that are delisted / IPO. Nothing nefarious going on there.

Here is the total return of FZROX vs VTSAX since the former fund’s inception in August:

FZROX: -10.62%
VTSAX: -10.57%

If the .05% underperformance concerns you, feel free to stick with Vanguard.

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Re: Fidelity Zero Funds

Post by HEDGEFUNDIE » Sun Jan 13, 2019 1:30 am

OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
There is no such thing as a “true index”. What does that even mean?

Every index has rules about what goes in and what stays out. Why would an index created by Fidelity be inherently inferior than an index created by S&P or Russell?

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 9:32 am

HEDGEFUNDIE wrote:
Sun Jan 13, 2019 1:27 am
danielc wrote:
Sun Jan 13, 2019 12:52 am
OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
That seems to be the case. Here's the prospectus for "Fidelity ZERO Total Market Index Fund". Here's what it says:
Prospectus wrote:
  • Normally investing at least 80% of its assets in common stocks included in the Fidelity U.S. Total Investable Market IndexSM...
I'm not sure how much I trust Fidelity to design an index, or to prioritize the needs of the investor above their own. I see a potential conflict of interest. They could make choices with the index that reduce their costs but are not necessarily beneficial to the investor. And if they basically define the index as "whatever we decided to put in this fund", they can report an artificially low tracking error....
The “80%” language is standard legalese that you will find in many index funds. Google that phrase and you will see it everywhere. It’s included because fund managers need to hold some cash and just in case there are temporary liquidity issues with tracking some stocks that are delisted / IPO. Nothing nefarious going on there.
Yes, I know. I didn't say anything about "80%". I just quoted the entire bullet point. My comment was about Fidelity making their own index, instead of following one of the common third-party indices like the ones from S&P, MSCI, and FTSE (for example). That's what OldSport was talking about too.

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Re: Fidelity Zero Funds

Post by mptfan » Sun Jan 13, 2019 9:36 am

HEDGEFUNDIE wrote:
Sun Jan 13, 2019 1:30 am
OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
There is no such thing as a “true index”. What does that even mean?

Every index has rules about what goes in and what stays out. Why would an index created by Fidelity be inherently inferior than an index created by S&P or Russell?
+1 I would love to hear what is considered a "true index."

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 9:38 am

HEDGEFUNDIE wrote:
Sun Jan 13, 2019 1:30 am
Every index has rules about what goes in and what stays out. Why would an index created by Fidelity be inherently inferior than an index created by S&P or Russell?
Because S&P and Russell have been making indices for a long time so their pros and cons are relatively well understood, while Fidelity is a new player in this arena. Also because there might be a small conflict between the goals of an index maker and the goals of a mutual fund company that is artificially keeping the ER low. Let me clarify that I think that Fidelity's ZERO funds are probably just fine. I'm not trying to disparage them. I'm just commenting on OldSport's thread about the fact that Fidelity made its own index.

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Re: Fidelity Zero Funds

Post by averagedude » Sun Jan 13, 2019 9:41 am

I am biased to Vanguard, but i believe this zero fund will closely match its benchmark over the long haul to within 10 basis points. Im sure they have computer model programs that can closely match the benchmark without actually perfectly buying the underlying security's.

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Re: Fidelity Zero Funds

Post by mptfan » Sun Jan 13, 2019 9:54 am

danielc wrote:
Sun Jan 13, 2019 9:38 am
I'm just commenting on OldSport's thread about the fact that Fidelity made its own index.
Yes, Fidelity made its own index, just like Standard and Poor's and Russell and MSCI and CRSP. The Vanguard Total Stock Market fund tracks the CRSP total market index, have you ever heard of CRSP? Do you know what CRSP is without googling it? How long has that index been around? All indices are made by someone and I don't see any reason why Fidelity's index would be inferior to anyone else's made up index.
Last edited by mptfan on Sun Jan 13, 2019 10:02 am, edited 6 times in total.

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Re: Fidelity Zero Funds

Post by TheTimeLord » Sun Jan 13, 2019 9:55 am

danielc wrote:
Sun Jan 13, 2019 9:32 am
HEDGEFUNDIE wrote:
Sun Jan 13, 2019 1:27 am
danielc wrote:
Sun Jan 13, 2019 12:52 am
OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
That seems to be the case. Here's the prospectus for "Fidelity ZERO Total Market Index Fund". Here's what it says:
Prospectus wrote:
  • Normally investing at least 80% of its assets in common stocks included in the Fidelity U.S. Total Investable Market IndexSM...
I'm not sure how much I trust Fidelity to design an index, or to prioritize the needs of the investor above their own. I see a potential conflict of interest. They could make choices with the index that reduce their costs but are not necessarily beneficial to the investor. And if they basically define the index as "whatever we decided to put in this fund", they can report an artificially low tracking error....
The “80%” language is standard legalese that you will find in many index funds. Google that phrase and you will see it everywhere. It’s included because fund managers need to hold some cash and just in case there are temporary liquidity issues with tracking some stocks that are delisted / IPO. Nothing nefarious going on there.
Yes, I know. I didn't say anything about "80%". I just quoted the entire bullet point. My comment was about Fidelity making their own index, instead of following one of the common third-party indices like the ones from S&P, MSCI, and FTSE (for example). That's what OldSport was talking about too.
From my perspective the issue is more with your understanding of indexing and how it works or the belief in some magical nature of name indexes than problems with what Fidelity is doing. Anyone please correct me if I am wrong but at their core indexes are supposed to a meaningful sampling of stocks large enough as to mimic the performance of a segment of the stock market nothing more.
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Re: Fidelity Zero Funds

Post by stan1 » Sun Jan 13, 2019 9:57 am

At these cost levels it comes down to how they manage security lending revenue. Has Fidelity tweaked which stocks they choose to sample in their index to slightly increase security lending revenue that would cover the cost of managing their fund while hoping performance stays within a few basis points of Vanguard? We don't know. If they have is that a smart move or something diabolical?

I do think Fidelity marketing with zero fee funds has out-hyped Vanguard's marketing over free trades. Most retail mutual fund customers don't know what security lending revenue is. Vanguard is in a tough place to explain to customers they charge a fee for expenses but give you security lending revenue back, especially if Fidelity in control of their own index and sampling algorithms can meet or slightly beat Vanguard returns most years. I think impact over time will be minor.
Last edited by stan1 on Sun Jan 13, 2019 9:58 am, edited 1 time in total.

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 9:57 am

mptfan wrote:
Sun Jan 13, 2019 9:54 am
danielc wrote:
Sun Jan 13, 2019 9:38 am
I'm just commenting on OldSport's thread about the fact that Fidelity made its own index.
Yes, Fidelity made its own index, just like Standard and Poor's and Russell and MSCI. All indices are made by someone and I don't see any reason why Fidelity's index would be inferior to anyone else's made up index.
I answered that elsewhere:
danielc wrote: Because S&P and Russell have been making indices for a long time so their pros and cons are relatively well understood, while Fidelity is a new player in this arena. Also because there might be a small conflict between the goals of an index maker and the goals of a mutual fund company that is artificially keeping the ER low. Let me clarify that I think that Fidelity's ZERO funds are probably just fine. I'm not trying to disparage them. I'm just commenting on OldSport's thread about the fact that Fidelity made its own index.

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 10:10 am

TheTimeLord wrote:
Sun Jan 13, 2019 9:55 am
From my perspective the issue is more with your understanding of indexing and how it works or the belief in some magical nature of name indexes than problems with what Fidelity is doing.
How can you possibly judge my understanding of how indexing works? How can you possibly decide that I or anyone believes that they are magical?
TheTimeLord wrote:
Sun Jan 13, 2019 9:55 am
Anyone please correct me if I am wrong but at their core indexes are supposed to a meaningful sampling of stocks large enough as to mimic the performance of a segment of the stock market nothing more.
Indexing is a little more complex than that. You've described perhaps the simplest possible indexes, like the Russell ones. But those indexes can lead to front loading, tax inefficiencies, churn (hence, transaction fees), etc. The earliest indices were only intended to track the market. Modern indices take into consideration a lot of the practicalities of actually building a mutual fund that tracks the index. For example, S&P does not automatically move stocks into and out of indices just because some market cap or P/B ratio changed a little bit. Decisions to alter the index composition are made slowly, decided by a committee, and are intentionally not done on a regular schedule. That helps prevent front loading, churn, and tax inefficiencies. CRSP has a different set of methods to achieve similar goals, and they have a more nuanced definition of "Growth" and "Value" than many indices. MSCI also makes very good indices.

Making a good index is not a trivial task. Maybe Fidelity will excel at it. Right now I just don't know, and I have not been able to find sufficient details about their index construction methodology to build any level of confidence.

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Re: Fidelity Zero Funds

Post by mptfan » Sun Jan 13, 2019 10:11 am

I think Fidelity's decision to create their own index is brilliant and quite frankly I'm surprised that Vanguard did not think of doing that before. Vanguard has done something similar by using indices created by the Center for Research in Security Prices (CRSP) as opposed to indices created by Standard and Poor's which I am sure are much less expensive. But why should Vanguard pay someone else a fee to create an index of publicly traded stocks when Vanguard is perfectly capable of doing that themselves? Are people really concerned that Vanguard will manipulate the numbers or that Vanguard's index would be less valid that other indices? I'm not. And if Vanguard did create a poor index or somehow manipulate the numbers, their total market fund would lag Fidelity's or Schwab's or other total market funds and they would put themselves at a competitive disadvantage and have to explain why their index funds lag other index funds and I think Vanguard has an incentive to avoid that.

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Re: Fidelity Zero Funds

Post by UpperNwGuy » Sun Jan 13, 2019 10:14 am

Some members of this forum just can't bring themselves to trust Fidelity (perhaps because of its for-profit character).

I think the proper comment would be, "The Fidelity index is new, and their ability to track it is as yet unproven, so there is a small element of additional risk in going with the new Zero fund in its first year." Saying that we can't trust Fidelity is a totally different statement.

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Re: Fidelity Zero Funds

Post by jhfenton » Sun Jan 13, 2019 10:19 am

How many times do we have to cover the same ground?

The ZERO funds are excellent funds. There is no secret gotcha. They will perform very much in line with the comparable Vanguard, Schwab, and iShares funds and ETFs give or take a few basis points either way.

If you want to have a tax-advantaged account at Fidelity they are excellent choices.

If you have a taxable account at Fidelity, I believe you would be better served by buying the comparable iShares ETF because of the superior tax efficiency of ETFs. Index mutual funds are reasonably tax efficient, but they are not perfectly so. They will still have occasional capital gains distributions. A well-managed equity ETF won't.

If you're at Schwab, you should buy Schwab funds and ETFs. If you're at Fidelity, you should buy Fidelity funds and iShares ETFs. If you're at Vanguard, you should buy Vanguard funds and anyone's low-cost ETFs (since they are all commission-free). (Vanguard's index mutual funds are OK in taxable because they have the patented ETF-as-a-share-class to provide the same tax efficiency to the mutual fund share classes.)

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Re: Fidelity Zero Funds

Post by livesoft » Sun Jan 13, 2019 10:24 am

I was invested in my old 401(k) in a US Government securities fund before the 2008-2009 thing. The language of the prospectus was the standard 80% idea. But it was a Morgan Stanley fund and somehow they decided to put about 20% Countrywide bonds in there. My presumption is that they had to unload those Countrywide bonds from other clients and gave them to unsuspecting 401(k) peeps. My 401(k) bond fund lost 10% of my money.

So the idea of whether to trust a vendor or not is important.
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Re: Fidelity Zero Funds

Post by TheTimeLord » Sun Jan 13, 2019 10:38 am

danielc wrote:
Sun Jan 13, 2019 10:10 am
TheTimeLord wrote:
Sun Jan 13, 2019 9:55 am
From my perspective the issue is more with your understanding of indexing and how it works or the belief in some magical nature of name indexes than problems with what Fidelity is doing.
How can you possibly judge my understanding of how indexing works? How can you possibly decide that I or anyone believes that they are magical?
TheTimeLord wrote:
Sun Jan 13, 2019 9:55 am
Anyone please correct me if I am wrong but at their core indexes are supposed to a meaningful sampling of stocks large enough as to mimic the performance of a segment of the stock market nothing more.
Indexing is a little more complex than that. You've described perhaps the simplest possible indexes, like the Russell ones. But those indexes can lead to front loading, tax inefficiencies, churn (hence, transaction fees), etc. The earliest indices were only intended to track the market. Modern indices take into consideration a lot of the practicalities of actually building a mutual fund that tracks the index. For example, S&P does not automatically move stocks into and out of indices just because some market cap or P/B ratio changed a little bit. Decisions to alter the index composition are made slowly, decided by a committee, and are intentionally not done on a regular schedule. That helps prevent front loading, churn, and tax inefficiencies. CRSP has a different set of methods to achieve similar goals, and they have a more nuanced definition of "Growth" and "Value" than many indices. MSCI also makes very good indices.

Making a good index is not a trivial task. Maybe Fidelity will excel at it. Right now I just don't know, and I have not been able to find sufficient details about their index construction methodology to build any level of confidence.
I used the word "or" because those seemed to be the 2 obvious possibility based on your responses.
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Re: Fidelity Zero Funds

Post by nedsaid » Sun Jan 13, 2019 11:20 am

The case against Fidelity Zero funds is very mild indeed. I own the Fidelity Total Stock Market Index but not the Zero version. First, I thought the Zero funds were gimmicky. Just something in me is suspicious of free stuff, I think of the "free" vacations from time share companies. It seems like there is a catch in there somewhere. Second, I want more stocks in a "Total Market" fund and not fewer. The version that charges fees has about 3,300-3,400 stocks in it and the Zero version has 2,500-2,600 stocks in it. So the Zero funds are using sampling techniques although I admit that 2,500-2,600 stocks is a very large sample. Third, you run the risk of tracking error. Fourth, there is the issue of tax efficiency. But these are not strong arguments, the Zero Funds should be perfectly fine investments and I suspect the differences between the low-fee and the Zero funds would be very minor.
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Re: Fidelity Zero Funds

Post by 2pedals » Sun Jan 13, 2019 11:24 am

No minimum investment, no expenses, no fees and it's financial services with a Fidelity brokerage account are wonderful things in my book. The hard part for some Bogleheads is they can not trust Fidelity management over Vanguard management for custodians of their money. The corporate structure is very different between Vanguard and Fidelity. Fidelity mutual funds are most likely are not tax efficient in a taxable account but I would not let that stop you from investing ZEROs. The convenience of using Fidelity mutual funds is nice if you are slowly adding to your investments month to month to build wealth and want set automatic investments or periodically buy mutual funds. I have been using Fidelity since 1983, and I happen to like the services that Fidelity provides so I am investing some of my money tIRA and Roth accounts in the Fidelity ZERO Total Market Index Fund.
Last edited by 2pedals on Sun Jan 13, 2019 11:54 am, edited 1 time in total.

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Re: Fidelity Zero Funds

Post by whodidntante » Sun Jan 13, 2019 11:27 am

jhfenton wrote:
Sun Jan 13, 2019 10:19 am
How many times do we have to cover the same ground?
Well, let's face it. Not many interesting and contentious things happen in passive investing. But thankfully we can argue about ZERO funds, factor investing, and international allocation forever. :sharebeer

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Re: Fidelity Zero Funds

Post by sabhen » Sun Jan 13, 2019 11:47 am

Fidelity just launched no-cost HSA (already covered in other threads), the Zero funds are ideal for investing into an HSA.

I wasted no time transferring my HSA from BoA with monthly fees to Fidelity.

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Re: Fidelity Zero Funds

Post by UpperNwGuy » Sun Jan 13, 2019 11:58 am

jhfenton wrote:
Sun Jan 13, 2019 10:19 am
How many times do we have to cover the same ground?
1. As many times as there are forum members who ask questions without first reading the previous threads on their topic.
2. As many times as those who lost (or think they lost) the earlier arguments want to make another attempt at convincing others.

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Re: Fidelity Zero Funds

Post by ruralavalon » Sun Jan 13, 2019 12:03 pm

OldSport wrote:
Sat Jan 12, 2019 6:28 pm
Are Fidelity Zero Funds any good? Do they track the same or different indexes as their similarly named index funds?
The new Fidelity ZERO funds track different indexes than their similarly named Fidelity Funds.

We won't know for sure if the differences are significant until we have some performance history.
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Re: Fidelity Zero Funds

Post by nix4me » Sun Jan 13, 2019 12:09 pm

Great funds! FZROX is outperforming VTSAX.

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Re: Fidelity Zero Funds

Post by AllieTB1323 » Sun Jan 13, 2019 12:48 pm

nix4me wrote:
Sun Jan 13, 2019 12:09 pm
Great funds! FZROX is outperforming VTSAX.
And FZROX has a $0 minimum versus VTSAX $3000. To many investors finding the $3000.00 discourages opening an account.

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Re: Fidelity Zero Funds

Post by danielc » Sun Jan 13, 2019 1:02 pm

TheTimeLord wrote:
Sun Jan 13, 2019 10:38 am
danielc wrote:
Sun Jan 13, 2019 10:10 am
TheTimeLord wrote:
Sun Jan 13, 2019 9:55 am
From my perspective the issue is more with your understanding of indexing and how it works or the belief in some magical nature of name indexes than problems with what Fidelity is doing.
How can you possibly judge my understanding of how indexing works? How can you possibly decide that I or anyone believes that they are magical?
I used the word "or" because those seemed to be the 2 obvious possibility based on your responses.
How is that any better? I responded to both sides of the "or".

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Re: Fidelity Zero Funds

Post by Northern Flicker » Sun Jan 13, 2019 1:05 pm

OldSport wrote:
Sun Jan 13, 2019 12:03 am
I read that the zero funds are not actual true index funds, like S&P, MSCI, CRSP, Russell, etc. but are generic Fidelity constructed "index" funds from a smaller amount of stocks from a true index. I did not know that. That is helpful to know.
Index funds normally use optimizers and sampling to track an index until they are large enough to implement full replication without excessive transaction costs.

What makes these different is that the index being tracked is not maintained by a disinterested 3rd party. This means there is not a benchmark outside of Fidelity’s control with which to transparently evaluate tracking error, normally the easiest way to monitor an index fund for costs not accounted for in ER (which are significantly larger than ER at current ER levels of various index funds).
Last edited by Northern Flicker on Sun Jan 13, 2019 2:05 pm, edited 1 time in total.
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Re: Fidelity Zero Funds

Post by Cycle » Sun Jan 13, 2019 1:08 pm

Don't be a first adopter, that's why I didn't switch to Fidelity zero when TLHing this year.

The difference in fees is pretty small, so just wait a couple years to see the tax efficiency and tracking to the index.

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Re: Fidelity Zero Funds

Post by Jack FFR1846 » Sun Jan 13, 2019 1:13 pm

As mentioned in the other threads, I split my US Stock position at Fidelity on August 6th, I believe the 2nd day that the zero funds were available. Here's where they stand as of close Friday:

FSKAX: $308,224.29
FZROX: $308,295.85
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Re: Fidelity Zero Funds

Post by nedsaid » Sun Jan 13, 2019 1:18 pm

Jack FFR1846 wrote:
Sun Jan 13, 2019 1:13 pm
As mentioned in the other threads, I split my US Stock position at Fidelity on August 6th, I believe the 2nd day that the zero funds were available. Here's where they stand as of close Friday:

FSKAX: $308,224.29
FZROX: $308,295.85
So far, so good. I own FSKAX, which is the low-fee version of the Fidelity Total Stock Market Index. The Zero version looks good here.
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LadyGeek
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Re: Fidelity Zero Funds

Post by LadyGeek » Sun Jan 13, 2019 1:51 pm

With regards to some previous posts, the discussion is getting contentious. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
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bck63
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Re: Fidelity Zero Funds

Post by bck63 » Sun Jan 27, 2019 3:46 pm

AllieTB1323 wrote:
Sun Jan 13, 2019 12:48 pm
nix4me wrote:
Sun Jan 13, 2019 12:09 pm
Great funds! FZROX is outperforming VTSAX.
And FZROX has a $0 minimum versus VTSAX $3000. To many investors finding the $3000.00 discourages opening an account.
This is me. I wanted to add an international fund and a total bond market fund to my portfolio. Didn't want to take $6,000 out of my cash savings and didn't want to sell any other investments. So, I bought the Zero International Fund and the Total US Bond Fund at Fidelity. Both no minimums. Then I figured what the heck, I'll buy the Zero Total Stock Market Fund. Now I'm doing a three fund portfolio at Fidelity, with all new money going there. Still love Vanguard, but for now, all new investing money is going to Fido.

One more thing -- I'm sure the Zero Funds are intended to be loss leaders. And they did suck me in. I opened a Fidelity Cash Management Account. But I'm finding it really convenient and I love it.

pasadena
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Re: Fidelity Zero Funds

Post by pasadena » Sun Jan 27, 2019 4:14 pm

I took a look at them when I was setting up my new retirement accounts at Fidelity earlier this month. I ended up choosing the regular Fidelity index funds in my BrokerageLink account for a few reasons:

- Part of it is what is explained in the other post - mostly that the benchmark is very new and those funds are also very new. I felt better having funds with an established history and more funds that follow the same index, for comparison purposes (but that is an emotional decision)

- The main reason is that they seem less diversified than the others. If I'm going to hold the market, then I want to hold as much of it as I can. I feel that way about the internaltional index funds (VTIAX vs FTIHX) but I'm limited to Fidelity funds.

Code: Select all

Ticker	ER	Giant	Large	Mid	Small	Micro	#Holdings
FZROX	0.000%	47.70%	29.31%	17.21%	5.34%	0.44%	 2,521.00
VTSAX	0.040%	46.96%	29.18%	17.40%	5.56%	0.90%	 3,639.00 
FSKAX	0.015%	46.91%	29.05%	17.42%	5.84%	0.79%	 3,381.00 
ITOT	0.030%	46.35%	29.58%	17.33%	5.91%	0.84%	 3,382.00 

Ticker	ER	Giant	Large	Mid	Small	Micro	Dev.	Emerg.	#Holdings
FZILX	0.000%	49.27%	34.02%	16.05%	0.64%	0.02%	82.90%	17.10% 	2,301.00
VTIAX	0.110%	43.82%	31.69%	18.77%	5.12%	0.60%	81.82%	18.18%	6,183.00 
FTIHX	0.060%	43.83%	31.62%	19.45%	4.78%	0.33%	82.39%	17.60% 	4,679.00 
IXUS	0.100%	43.64%	31.15%	19.92%	4.83%	0.45%	81.97%	18.03% 	3,428.00 

Side note: I did choose them in my HSA. Mostly because that's a very small amount that I don't care that much about, and I want to see how they behave - I'm curious :)

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