Move VG Roth to Fidelity for ZERO fund?
Move VG Roth to Fidelity for ZERO fund?
My Roth account at Vanguard currently has 100% investment in VTSAX. My other retirement accounts include bonds and international.
The expense was extremely low for VTSAX, however, it’s not zero.
I have an account at both Vanguard and Fidelity so I log in to each place and therefore it’s no more convenient for me to have a Roth at either one. I opened it in Vanguard, and have been happy with them so far, so I really had no reason to change. However, switching to Fidelity would save me a little bit on an expense ratio. I realize it’s a small number of savings each year, however, it’s still a savings.
It appears the Fidelity ZERO Large Cap Index Fund (FNILX) more closely resembles the S&P 500 index vanguard offers, and the total stock market zero fund through Fidelity doesn’t contain nearly the same number of companies. So I may consider FNILX if I switch.
Has anyone already made the switch? Or considered it and stayed with Vanguard? What is the opinion of the forum about this potential decision?
The expense was extremely low for VTSAX, however, it’s not zero.
I have an account at both Vanguard and Fidelity so I log in to each place and therefore it’s no more convenient for me to have a Roth at either one. I opened it in Vanguard, and have been happy with them so far, so I really had no reason to change. However, switching to Fidelity would save me a little bit on an expense ratio. I realize it’s a small number of savings each year, however, it’s still a savings.
It appears the Fidelity ZERO Large Cap Index Fund (FNILX) more closely resembles the S&P 500 index vanguard offers, and the total stock market zero fund through Fidelity doesn’t contain nearly the same number of companies. So I may consider FNILX if I switch.
Has anyone already made the switch? Or considered it and stayed with Vanguard? What is the opinion of the forum about this potential decision?
Re: Move VG Roth to Fidelity for ZERO fund?
I moved to Fidelity for the better support, not for the zero funds. Zero doesn't really mean zero, you can see the performance almost exactly mirrors the VG fund. I hold VG etfs at fidelity. I hold zero funds at fidelity. The same as to make no difference (except you can transfer ETFs out to any broker you want with no selling and no fees, should you ever want to)
Re: Move VG Roth to Fidelity for ZERO fund?
It doesn’t? Not even inside a Roth?
Re: Move VG Roth to Fidelity for ZERO fund?
It does really mean ZERO expense ratio. Some Vanguard fans like to speculate they will make that up some other way but the returns speak for themselves.
It is FZROX that is the total market fund similar to VTSAX. It's a great fund to have in Roth. I am not sure you need to switch just to get the extra dollars of ER savings- it won't amount to too much unless you have a really large portfolio.
You will find longtime Vanguard fans like to speculate and poke fun at these funds. Vanguard fans were proud when Vanguard had the lowest ERs - but now that Fidelity has beat them at their own game they like to try to say the lowest ER doesn't matter.
Last edited by GoldStar on Thu Jan 30, 2025 3:26 pm, edited 2 times in total.
Re: Move VG Roth to Fidelity for ZERO fund?
The difference between 0.00 and 0.03 is meaningless, since the ER doesn't capture all the fund expenses.
How well it tracks its index, controls its trading costs (not in the ER), and whether it returns share lending revenue to the shareholders matters more.
Over the short period of time FZROX has existed, it has done better than VTSAX, but that is likely due to it having 1,000-1,500 fewer of the small and micro cap stocks.
Re: Move VG Roth to Fidelity for ZERO fund?
The ER difference is meaningless. Every day the funds fluctuate 10x more than the annual ER difference. Find another reason to switch.
Re: Move VG Roth to Fidelity for ZERO fund?
The performance difference is explainable by sampling rather than any miniscule ER difference viewtopic.php?t=295930GoldStar wrote: Thu Jan 30, 2025 3:20 pmIt does really mean ZERO expense ratio. Some Vanguard fans like to speculate they will make that up some other way but the returns speak for themselves.
It is FZROX that is the total market fund similar to VTSAX. It's a great fund to have in Roth. I am not sure you need to switch just to get the extra dollars of ER savings- it won't amount to too much unless you have a really large portfolio.
You will find longtime Vanguard fans like to speculate and poke fun at these funds. Vanguard fans were proud when Vanguard had the lowest ERs - but now that Fidelity has beat them at their own game they like to try to say the lowest ER doesn't matter.
Re: Move VG Roth to Fidelity for ZERO fund?
Maybe. But it is really a 0% expense ratio.nalor511 wrote: Thu Jan 30, 2025 3:46 pmThe performance difference is explainable by sampling rather than any miniscule ER difference viewtopic.php?t=295930GoldStar wrote: Thu Jan 30, 2025 3:20 pm
It does really mean ZERO expense ratio. Some Vanguard fans like to speculate they will make that up some other way but the returns speak for themselves.
It is FZROX that is the total market fund similar to VTSAX. It's a great fund to have in Roth. I am not sure you need to switch just to get the extra dollars of ER savings- it won't amount to too much unless you have a really large portfolio.
You will find longtime Vanguard fans like to speculate and poke fun at these funds. Vanguard fans were proud when Vanguard had the lowest ERs - but now that Fidelity has beat them at their own game they like to try to say the lowest ER doesn't matter.
We can all speculate about what will do better for the next 10 years but there is no denying FZROX starts with a slight edge having the 0% ER. It is indeed real.
Telling people zero ER isn't really zero ER is confusing and wrong .
Re: Move VG Roth to Fidelity for ZERO fund?
I pick up pennies in the street when I'm walking too, but I have to accept that it's a hobby and not a productive activity. Sure, it's okay to move money around as a hobby, I guess, but if you're going to do that can't you pick up a transfer bonus from somebody in the process? That would make it a more productive hobby.dave.m wrote: Thu Jan 30, 2025 3:01 pm I realize it’s a small number of savings each year, however, it’s still a savings.
Re: Move VG Roth to Fidelity for ZERO fund?
That's not entirely true.GoldStar wrote: Thu Jan 30, 2025 3:52 pmMaybe. But it is really a 0% expense ratio.nalor511 wrote: Thu Jan 30, 2025 3:46 pm
The performance difference is explainable by sampling rather than any miniscule ER difference viewtopic.php?t=295930
We can all speculate about what will do better for the next 10 years but there is no denying FZROX starts with a slight edge having the 0% ER. It is indeed real.
Telling people zero ER isn't really zero ER is confusing and wrong .
The ER does not include all the funds expenses. In particular, trading costs aren't part of the ER. It also doesn't reflect lending income returned to the fund.
That's not to say FZROX isn't a good fund. It's that the "0" is more marketing than substance, just like Vanguard's claim that the mutual fund shareholders own Vanguard.
Note that I hold it in my HSA, which is my only account at Fidelity. I don't hold it because it's ER, but because it means that I don't have to think about wash sales.
Re: Move VG Roth to Fidelity for ZERO fund?
I'm at Fidelity and I like it and the ZERO funds. I hold FZROX.
If you want a total stock market fund I wouldn't worry about the number of stocks VTSAX has compared to others. Any of the funds below would serve someone well.
VTSAX - 3,609 stocks - ER 0.03% - Vanguard Total Stock Market Index Fund Admiral Shares
FSKAX - 3,900 stocks - ER 0.015% - Fidelity Total Market Index Fund
FZROX - 2,563 stocks - ER 0 - Fidelity ZERO Total Market Index Fund
ITOT - 2,534 stocks - ER 0.03% - iShares Core S&P Total US Stock Market ETF
SCHB - 2,429 stocks - ER 0.03% - Schwab U.S. Broad Market ETF
If you want a total stock market fund I wouldn't worry about the number of stocks VTSAX has compared to others. Any of the funds below would serve someone well.
VTSAX - 3,609 stocks - ER 0.03% - Vanguard Total Stock Market Index Fund Admiral Shares
FSKAX - 3,900 stocks - ER 0.015% - Fidelity Total Market Index Fund
FZROX - 2,563 stocks - ER 0 - Fidelity ZERO Total Market Index Fund
ITOT - 2,534 stocks - ER 0.03% - iShares Core S&P Total US Stock Market ETF
SCHB - 2,429 stocks - ER 0.03% - Schwab U.S. Broad Market ETF
Re: Move VG Roth to Fidelity for ZERO fund?
I would not move primarily for ZERO funds.
If you have a traditional IRA I would tend to keep a traditional IRA at the same place as your Roth IRA for ease of potential Roth conversions. Its very easy to do Roth conversions at Fidelity when your traditional IRA account is there as well.
If you have a traditional IRA I would tend to keep a traditional IRA at the same place as your Roth IRA for ease of potential Roth conversions. Its very easy to do Roth conversions at Fidelity when your traditional IRA account is there as well.
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Re: Move VG Roth to Fidelity for ZERO fund?
If you're really optimizing pennies, why not get Robinhood gold ($60 a year) --- get a 2% rollover bonus on your entire IRA, then 3% additional match for all annual contributions into that IRA? (roth or trad).
Plus the RH gold comes with $1000 in interest free margin (that really itself offsets the $60 fee).
That "2%" bonus is equivalent to your ER differential (.03-0.015%) by a factor of about 100 years.
Plus the RH gold comes with $1000 in interest free margin (that really itself offsets the $60 fee).
That "2%" bonus is equivalent to your ER differential (.03-0.015%) by a factor of about 100 years.
Re: Move VG Roth to Fidelity for ZERO fund?
It IS entirely true that FZROX charges a 0% Expense Ratio while VTSAX charges something greater.exodusNH wrote: Thu Jan 30, 2025 4:10 pmThat's not entirely true.GoldStar wrote: Thu Jan 30, 2025 3:52 pm
Maybe. But it is really a 0% expense ratio.
We can all speculate about what will do better for the next 10 years but there is no denying FZROX starts with a slight edge having the 0% ER. It is indeed real.
Telling people zero ER isn't really zero ER is confusing and wrong .
The ER does not include all the funds expenses. In particular, trading costs aren't part of the ER. It also doesn't reflect lending income returned to the fund.
That's not to say FZROX isn't a good fund. It's that the "0" is more marketing than substance, just like Vanguard's claim that the mutual fund shareholders own Vanguard.
Note that I hold it in my HSA, which is my only account at Fidelity. I don't hold it because it's ER, but because it means that I don't have to think about wash sales.
You can call it marketing- that does not make it untrue.
There might be trading costs but all funds have them and they are outside the expense ratio. The lower ER gives the fund a starting advantage.
Re: Move VG Roth to Fidelity for ZERO fund?
One thing that I always found a bit peculiar about the Fidelity Zero funds is that they distribute dividends only once per year in December, whereas most other stock funds have quarterly or semi-annual distributions. Is it possible that they do this so they can earn more interest on the dividends over the year, or perhaps save some transaction costs? In any case it means that -- assuming equal dividend yield -- the investor will have a slightly lower return on the dividends than with a fund that distributes more often.GoldStar wrote: Thu Jan 30, 2025 3:20 pmIt does really mean ZERO expense ratio. Some Vanguard fans like to speculate they will make that up some other way but the returns speak for themselves.
Re: Move VG Roth to Fidelity for ZERO fund?
Some funds are quarterly, some semi-annual, some annual. Annual isn't specific to just FZROX. When the funds distributes - its value drops by that amount. How is one that distributes more often giving me a better return? Do you have a reference that explains how this could be?Eno Deb wrote: Thu Jan 30, 2025 5:07 pmOne thing that I always found a bit peculiar about the Fidelity Zero funds is that they distribute dividends only once per year in December, whereas most other stock funds have quarterly or semi-annual distributions. Is it possible that they do this so they can earn more interest on the dividends over the year, or perhaps save some transaction costs? In any case it means that -- assuming equal dividend yield -- the investor will have a slightly lower return on the dividends than with a fund that distributes more often.GoldStar wrote: Thu Jan 30, 2025 3:20 pmIt does really mean ZERO expense ratio. Some Vanguard fans like to speculate they will make that up some other way but the returns speak for themselves.
I assumed the ones that distribute more often only do so because some of their investors don't reinvest the amount - but want the quarterly income. I didn't know there was some return advantage realized.
You seen to imply that Fidelity is somehow taking a more frequent dividend and profiting from it.
Re: Move VG Roth to Fidelity for ZERO fund?
No reference, just speculation. If they distribute the dividends quarterly, as investor I can invest them earlier and earn some returns. If they distribute the same amount of annual dividends only, say, at the end of the year, they should accumulate as cash in the mutual fund, and presumably the fund company can earn interest on it?GoldStar wrote: Thu Jan 30, 2025 5:49 pmSome funds are quarterly, some semi-annual, some annual. Annual isn't specific to just FZROX. When the funds distributes - its value drops by that amount. How is one that distributes more often giving me a better return? Do you have a reference that explains how this could be?Eno Deb wrote: Thu Jan 30, 2025 5:07 pm One thing that I always found a bit peculiar about the Fidelity Zero funds is that they distribute dividends only once per year in December, whereas most other stock funds have quarterly or semi-annual distributions. Is it possible that they do this so they can earn more interest on the dividends over the year, or perhaps save some transaction costs? In any case it means that -- assuming equal dividend yield -- the investor will have a slightly lower return on the dividends than with a fund that distributes more often.
Is a stock fund allowed to reinvest dividends back into stocks rather than distributing them?I assumed the ones that distribute more often only do so because some of their investors don't reinvest the amount - but want the quarterly income.
Re: Move VG Roth to Fidelity for ZERO fund?
Okay. I think your speculation is wrong.Eno Deb wrote: Thu Jan 30, 2025 6:00 pm No reference, just speculation. If they distribute the dividends quarterly, as investor I can invest them earlier and earn some returns.
If a fund distributes $1.00 a year in December you can take that $1 after the fund drops by that $1 and put it back in the fund. If, instead it drops 25 cents 4 times a year that is 4 times the value drops by 25 cents. You take that 25 and invest it back in the fund. Net is the same. Some funds would probably hold the dividends for multiple years if they could but are required to distribute at least once yearly because Uncle Sam wants his taxes.
Re: Move VG Roth to Fidelity for ZERO fund?
The more frequent distributions have more time to remain invested, i.e. more time in the market. Isn't it kind of like how the frequency of compounding affects the final amount by maximizing the interest paid? Continuous compounding is best. The closer you get to continuous compounding, the better the result. 4 is closer to continuous than 1 is. Otherwise, getting a big refund at tax time would be the same thing as having that money distributed in your paycheck thoughout the year to invest. But having the money periodically should clearly be the better option than letting someone else hold it and distribute it to you as a lump sum at some future date.GoldStar wrote: Thu Jan 30, 2025 6:13 pmOkay. I think your speculation is wrong.Eno Deb wrote: Thu Jan 30, 2025 6:00 pm No reference, just speculation. If they distribute the dividends quarterly, as investor I can invest them earlier and earn some returns.
If a fund distributes $1.00 a year in December you can take that $1 after the fund drops by that $1 and put it back in the fund. If, instead it drops 25 cents 4 times a year that is 4 times the value drops by 25 cents. You take that 25 and invest it back in the fund. Net is the same. Some funds would probably hold the dividends for multiple years if they could but are required to distribute at least once yearly because Uncle Sam wants his taxes.
Last edited by Feldman on Thu Jan 30, 2025 6:29 pm, edited 1 time in total.
Re: Move VG Roth to Fidelity for ZERO fund?
Net isn't the same because the price may be different once a year than 4 times a year, and with the latter you get use of the money earlier which has some value, more time to grow. How much value? Probably the 0.03% they're saving you on feesGoldStar wrote: Thu Jan 30, 2025 6:13 pmOkay. I think your speculation is wrong.Eno Deb wrote: Thu Jan 30, 2025 6:00 pm No reference, just speculation. If they distribute the dividends quarterly, as investor I can invest them earlier and earn some returns.
If a fund distributes $1.00 a year in December you can take that $1 after the fund drops by that $1 and put it back in the fund. If, instead it drops 25 cents 4 times a year that is 4 times the value drops by 25 cents. You take that 25 and invest it back in the fund. Net is the same. Some funds would probably hold the dividends for multiple years if they could but are required to distribute at least once yearly because Uncle Sam wants his taxes.
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Re: Move VG Roth to Fidelity for ZERO fund?
I use Zero funds in Fidelity HSA but I would not move my Vanguard funds to Fidelity to do that. You can of course if you want.
Re: Move VG Roth to Fidelity for ZERO fund?
But if the fund isn't distributing to me 4 times a year isn't it simply compounding within the fund itself versus me deciding to compound it by putting it back in the fund?Feldman wrote: Thu Jan 30, 2025 6:27 pmThe more frequent distributions have more time to remain invested, i.e. more time in the market. Isn't it kind of like how the frequency of compounding affects the final amount by maximizing the interest paid? Continuous compounding is best. The closer you get to continuous compounding, the better the result. 4 is closer to continuous than 1 is. Otherwise, getting a big refund at tax time would be the same thing as having that money distributed in your paycheck thoughout the year to invest. But having the money periodically should clearly be the better option than letting someone else hold it and distribute it to you as a lump sum at some future date.GoldStar wrote: Thu Jan 30, 2025 6:13 pm
Okay. I think your speculation is wrong.
If a fund distributes $1.00 a year in December you can take that $1 after the fund drops by that $1 and put it back in the fund. If, instead it drops 25 cents 4 times a year that is 4 times the value drops by 25 cents. You take that 25 and invest it back in the fund. Net is the same. Some funds would probably hold the dividends for multiple years if they could but are required to distribute at least once yearly because Uncle Sam wants his taxes.
It's not like they are taking stock dividend proceeds and putting them somewhere else until they decide to pay a dividend. They use the money in the fund - at some point at least once a year they must distribute the net amount but when they do they drop fund value by same amount. Either they reinvest or I reinvest - I still don't see how the net isn't the same.
Re: Move VG Roth to Fidelity for ZERO fund?
I am still confused - do you have a reference?nalor511 wrote: Thu Jan 30, 2025 6:29 pm Net isn't the same because the price may be different once a year than 4 times a year, and with the latter you get use of the money earlier which has some value, more time to grow. How much value? Probably the 0.03% they're saving you on fees
If I am reinvesting the dividend they are required to pay out yearly back into the fund how does it matter whether they are reinvesting it more frequently or paying it out to me and forcing me to do so more frequently.
Ideally the fund would never pay the dividends out and just keep them invested.
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Re: Move VG Roth to Fidelity for ZERO fund?
[Unnecessary comment removed by admin LadyGeek] You've jumped the shark. Spend your time on something that matters. This doesn't. These funds are the same for all practical purposes, at least inside a retirement account.dave.m wrote: Thu Jan 30, 2025 3:01 pm My Roth account at Vanguard currently has 100% investment in VTSAX. My other retirement accounts include bonds and international.
The expense was extremely low for VTSAX, however, it’s not zero.
I have an account at both Vanguard and Fidelity so I log in to each place and therefore it’s no more convenient for me to have a Roth at either one. I opened it in Vanguard, and have been happy with them so far, so I really had no reason to change. However, switching to Fidelity would save me a little bit on an expense ratio. I realize it’s a small number of savings each year, however, it’s still a savings.
It appears the Fidelity ZERO Large Cap Index Fund (FNILX) more closely resembles the S&P 500 index vanguard offers, and the total stock market zero fund through Fidelity doesn’t contain nearly the same number of companies. So I may consider FNILX if I switch.
Has anyone already made the switch? Or considered it and stayed with Vanguard? What is the opinion of the forum about this potential decision?
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Re: Move VG Roth to Fidelity for ZERO fund?
It depends on whether the dividends are accumulated and held as cash within the fund, or used to purchase more holdings for the fund. I am not knowledgeable enough about the mechanics of mutual funds to know which is correct, but I'm interested to learn.GoldStar wrote: Thu Jan 30, 2025 6:36 pmBut if the fund isn't distributing to me 4 times a year isn't it simply compounding within the fund itself versus me deciding to compound it by putting it back in the fund?Feldman wrote: Thu Jan 30, 2025 6:27 pm
The more frequent distributions have more time to remain invested, i.e. more time in the market. Isn't it kind of like how the frequency of compounding affects the final amount by maximizing the interest paid? Continuous compounding is best. The closer you get to continuous compounding, the better the result. 4 is closer to continuous than 1 is. Otherwise, getting a big refund at tax time would be the same thing as having that money distributed in your paycheck thoughout the year to invest. But having the money periodically should clearly be the better option than letting someone else hold it and distribute it to you as a lump sum at some future date.
It's not like they are taking stock dividend proceeds and putting them somewhere else until they decide to pay a dividend. They use the money in the fund - at some point at least once a year they must distribute the net amount but when they do they drop fund value by same amount. Either they reinvest or I reinvest - I still don't see how the net isn't the same.
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Re: Move VG Roth to Fidelity for ZERO fund?
I just did the opposite - had the zero funds in a Roth at Fidelity but moved it to Vanguard, where I have a taxable account that holds VTSAX and VTIAX. I first had to sell the zero funds and buy VOO so that I wouldn’t be out of the market for several days. Once all the shares were transferred over, I sold the VOO shares and purchased VTSAX and VTIAX in my Roth (since I prefer mutual funds to ETFs). Doing this all was more cumbersome than I had anticipated. On the day I sold VOO and bought VTSAX/VTIAX, the market was more volatile than usual, and I probably lost more money than if I had eaten the fee to exchange into the same VG mutual funds at Fidelity before the transfer. Overall, I’m happy to have everything consolidated, and I was very unhappy with Fidelity’s account closings and fund holds (my transfer of $7000 for my IRA contribution was held for like 4 weeks).
I know it’s not ideal to hold the same funds in taxable and retirement account, but I don’t intend to sell any taxable assets for many years, if ever, and I figure I can switch the Roth assets to something different when that time comes.
I know it’s not ideal to hold the same funds in taxable and retirement account, but I don’t intend to sell any taxable assets for many years, if ever, and I figure I can switch the Roth assets to something different when that time comes.
Re: Move VG Roth to Fidelity for ZERO fund?
Practically all funds maintain some cash in a money market fund for short-term liquidity purposes.
Having said that, most of the time the distributions are much larger than the size of the money market account. For example, in the 2023 annual report, the Vanguard 500 fund cash had a money market fund of $2.5 billion (and it had been about that size in semi-annual and annual reports for several years). However, the total distributions for 2023 for the fund (all classes) were nearly $14 billion. So this means the dividends were invested in the stocks of the index until distribution time.
Keep in mind for a mutual fund where shareholders reinvest distributions, nothing needs to be done (the reinvestment is just an accounting shift). Stocks only have to be sold for people taking distributions in cash (in the mutual fund or all shareholders for an ETF).
Therefore whether a fund distributes quarterly or annually really makes no difference to returns.
Having said that, most of the time the distributions are much larger than the size of the money market account. For example, in the 2023 annual report, the Vanguard 500 fund cash had a money market fund of $2.5 billion (and it had been about that size in semi-annual and annual reports for several years). However, the total distributions for 2023 for the fund (all classes) were nearly $14 billion. So this means the dividends were invested in the stocks of the index until distribution time.
Keep in mind for a mutual fund where shareholders reinvest distributions, nothing needs to be done (the reinvestment is just an accounting shift). Stocks only have to be sold for people taking distributions in cash (in the mutual fund or all shareholders for an ETF).
Therefore whether a fund distributes quarterly or annually really makes no difference to returns.
Re: Move VG Roth to Fidelity for ZERO fund?
I'm with rkhusky and White Coat Investor. The difference in expense ratio is not material. 0.03% is $30 per $100,000 invested per year. Even compounded over many years, this is not going to make a significant difference (50 x 30 = $1500).
Re: Move VG Roth to Fidelity for ZERO fund?
Thank you for the clear explanation.Geologist wrote: Thu Jan 30, 2025 7:02 pm Practically all funds maintain some cash in a money market fund for short-term liquidity purposes.
Having said that, most of the time the distributions are much larger than the size of the money market account. For example, in the 2023 annual report, the Vanguard 500 fund cash had a money market fund of $2.5 billion (and it had been about that size in semi-annual and annual reports for several years). However, the total distributions for 2023 for the fund (all classes) were nearly $14 billion. So this means the dividends were invested in the stocks of the index until distribution time.
Keep in mind for a mutual fund where shareholders reinvest distributions, nothing needs to be done (the reinvestment is just an accounting shift). Stocks only have to be sold for people taking distributions in cash (in the mutual fund or all shareholders for an ETF).
Therefore whether a fund distributes quarterly or annually really makes no difference to returns.
Re: Move VG Roth to Fidelity for ZERO fund?
I think it depends on what the fund does with the dividends that it doesn't pay out quickly. If they keep it as cash in the fund, they will probably earn some interest. If they distribute it earlier you can invest it (same fund or not) and earn some returns.GoldStar wrote: Thu Jan 30, 2025 6:13 pmOkay. I think your speculation is wrong.Eno Deb wrote: Thu Jan 30, 2025 6:00 pm No reference, just speculation. If they distribute the dividends quarterly, as investor I can invest them earlier and earn some returns.
If a fund distributes $1.00 a year in December you can take that $1 after the fund drops by that $1 and put it back in the fund. If, instead it drops 25 cents 4 times a year that is 4 times the value drops by 25 cents. You take that 25 and invest it back in the fund. Net is the same.
Last edited by Eno Deb on Thu Jan 30, 2025 7:17 pm, edited 1 time in total.
Re: Move VG Roth to Fidelity for ZERO fund?
Thanks. I was beginning to think I was missing something when 3 people were telling me otherwise and was not able to articulate it as well.Geologist wrote: Thu Jan 30, 2025 7:02 pm
Therefore whether a fund distributes quarterly or annually really makes no difference to returns.
It seems this is just another case of folks going out of their way with trying to find fault with this fund.
Re: Move VG Roth to Fidelity for ZERO fund?
That also seems weird, because then two funds holding the same stocks but having different distribution schedules would likely have different dividend yields depending on how the holdings develop throughout the year. Are stock funds allowed to simply reinvest dividends instead of distributing them?Geologist wrote: Thu Jan 30, 2025 7:02 pm Practically all funds maintain some cash in a money market fund for short-term liquidity purposes.
Having said that, most of the time the distributions are much larger than the size of the money market account. For example, in the 2023 annual report, the Vanguard 500 fund cash had a money market fund of $2.5 billion (and it had been about that size in semi-annual and annual reports for several years). However, the total distributions for 2023 for the fund (all classes) were nearly $14 billion. So this means the dividends were invested in the stocks of the index until distribution time.
Re: Move VG Roth to Fidelity for ZERO fund?
I admitted to not being confident in how the fund was structured and what was actually happening with the unpaid dividends. Discussing topics is how we reach greater understanding. Had you articulated with the same effectiveness and confidence as Geologist, I would have accepted that. I'm appreciative, and we all learned something.GoldStar wrote: Thu Jan 30, 2025 7:17 pmThanks. I was beginning to think I was missing something when 3 people were telling me otherwise and was not able to articulate it as well.Geologist wrote: Thu Jan 30, 2025 7:02 pm
Therefore whether a fund distributes quarterly or annually really makes no difference to returns.
It seems this is just another case of folks going out of their way with trying to find fault with this fund.
Re: Move VG Roth to Fidelity for ZERO fund?
I suppose there could be one reason why Fidelity Zero funds pay distributions annually: there is some level of administrative expense in paying distributions. Since the expenses of the Fidelity Zero funds (except for the fees and expenses of the Independent Trustees) are being paid by Fidelity Management and Research (the parent company of Fidelity), it lowers their expenses if distributions are only paid once per year.
Re: Move VG Roth to Fidelity for ZERO fund?
I didn't mean any ill will against you or anyone else in this thread specifically. It's just for years when this fund comes up different speculations around other ways Fidelity might be making money, or how the fund must be inferior, have come up. Usually someone else jumps in and shoots those items down. This is the first time I recall the dividend payment schedule being brought up as a negative and I too, was really trying to sort out if there was really a valid negative this time.Feldman wrote: Thu Jan 30, 2025 7:25 pmI admitted to not being confident in how the fund was structured and what was actually happening with the unpaid dividends. Discussing topics is how we reach greater understanding. Had you articulated with the same effectiveness and confidence as Geologist, I would have accepted that. I'm appreciative, and we all learned something.GoldStar wrote: Thu Jan 30, 2025 7:17 pm
Thanks. I was beginning to think I was missing something when 3 people were telling me otherwise and was not able to articulate it as well.
It seems this is just another case of folks going out of their way with trying to find fault with this fund.
The only potential downside of this fund is you can't move it outside of Fidelity. Otherwise - it is a great fund.
Re: Move VG Roth to Fidelity for ZERO fund?
As the person who first brought it up: if you re-read my first post you'll see that I was asking a question. Please don't put words in my mouth.GoldStar wrote: Thu Jan 30, 2025 7:39 pmThis is the first time I recall the dividend payment schedule being brought up as a negative
Re: Move VG Roth to Fidelity for ZERO fund?
With all respect - the following are your words and it isn't a question- it is a statement of certainty:Eno Deb wrote: Thu Jan 30, 2025 7:43 pmAs the person who first brought it up: if you re-read my first post you'll see that I was asking a question. Please don't put words in my mouth.GoldStar wrote: Thu Jan 30, 2025 7:39 pmThis is the first time I recall the dividend payment schedule being brought up as a negative
.In any case it means that -- assuming equal dividend yield -- the investor will have a slightly lower return on the dividends than with a fund that distributes more often
Next poster was also a statement of certainly following yours.
Re: Move VG Roth to Fidelity for ZERO fund?
I am not even sure Milburn Drysdale or Mr. Mooney would consider making the switch. Juice not worth the squeeze.
If someone asks you the time, why are you telling them how to build a watch?
Re: Move VG Roth to Fidelity for ZERO fund?
from Marketwatch... 1YR. 3Yr.* 5 Yr.* (*annualized)
VTSAX 23.77% 12.00%. 14.16%
FZROX 23.86% 12.16%. 14.31%
A very small difference - but what an amazing stretch the market has had these last years!
VTSAX 23.77% 12.00%. 14.16%
FZROX 23.86% 12.16%. 14.31%
A very small difference - but what an amazing stretch the market has had these last years!
Re: Move VG Roth to Fidelity for ZERO fund?
If you want zero ER and something that tracks the S&P 500, how about BNY Mellon US Large Cap Core Equity ETF , ticker BKLC?dave.m wrote: Thu Jan 30, 2025 3:01 pm ...
The expense was extremely low for VTSAX, however, it’s not zero.
...
It appears the Fidelity ZERO Large Cap Index Fund (FNILX) more closely resembles the S&P 500 index vanguard offers...
You can trade it at any brokerage. It won't suffer from the lock-in of the Fidelity Zero mutual funds.
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Re: Move VG Roth to Fidelity for ZERO fund?
I use FZILX (this is the "zero" International Equity) and I find some of the discussion here of interest. I don't think it's a great look, though, for forum respondents to tell the OP that his/her interest in a financial matter like this is not worth the time of day. I know I've seen celebratory threads about a fund lowering its expenses from 0.06 to 0.03, for example - maybe its OK if it lands you (still) at Vanguard? Not to mention so many threads about nothing. My international allocation is somewhere near 10 times the example above, putting me in line for savings of $15,000? A little here, a little there, pretty soon we're talking about real money.dave.m wrote: Thu Jan 30, 2025 3:01 pm Has anyone already made the switch? Or considered it and stayed with Vanguard? What is the opinion of the forum about this potential decision?
Re: Move VG Roth to Fidelity for ZERO fund?
Mutual funds must distribute essentially all their net income each year, but there is no requirement they hold the dividends they receive in cash until they distribute them. Furthermore, if they are index funds, to minimize their tracking error, they will want to remain as closely invested to the index as possible. That would mean investing available cash (beyond their usual minimum for liquidity) in the index. Keep in mind that the fund receives cash in a number of ways, not just from dividends: new investments from investors, interest on the liquid cash. (and they may need to disburse cash for expenses or for investors redeeming shares). Therefore, they can just invest net cash that comes in.Eno Deb wrote: Thu Jan 30, 2025 7:23 pmThat also seems weird, because then two funds holding the same stocks but having different distribution schedules would likely have different dividend yields depending on how the holdings develop throughout the year. Are stock funds allowed to simply reinvest dividends instead of distributing them?Geologist wrote: Thu Jan 30, 2025 7:02 pm Practically all funds maintain some cash in a money market fund for short-term liquidity purposes.
Having said that, most of the time the distributions are much larger than the size of the money market account. For example, in the 2023 annual report, the Vanguard 500 fund cash had a money market fund of $2.5 billion (and it had been about that size in semi-annual and annual reports for several years). However, the total distributions for 2023 for the fund (all classes) were nearly $14 billion. So this means the dividends were invested in the stocks of the index until distribution time.
Finally, as I pointed out in another post, for mutual fund investors who reinvest distributions (typically this is most; for the Fidelity Total Stock Zero fund, it appears to be more than 90%), no cash is required for the distributions. There is just a bookkeeping change that adds shares to each account at a lower NAV.
Edit: by the way, the same fund can have different yields. Vanguard ETF share classes have all distributions in cash and each brokerage reinvests those distributions on different days (for investors who reinvest distributions). This creates different yields for that fund depending on the share price that each brokerage gets for its purchase of the ETF for reinvestment.
Re: Move VG Roth to Fidelity for ZERO fund?
If I were at Fidelity I would look at the zero funds, but would probably go with their standard Total Market fund. Using a standard third-party index, instead of the proprietary index that the zero funds follow, would be worth the tiny ER difference.
Re: Move VG Roth to Fidelity for ZERO fund?
I think another reason FZROX has outperformed and may well continue to outperform is that in addition to waving the ER, Fidelity pays no licensing fee to the benchmark owner--no sliver to S&P or Wilshire. I just checked, Portfolio Visualizer reports that as of 1/31/2025, FZROX has outperformed VTI and VTSAX in every measured time period, by 10 basis points annually for VTI, 14 for VTSAX. Just as Mr. Bogle explained "invest we must," it is also true that "choose we must." Choosing the best performer takes no more time or effort, so that's my approach.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
Re: Move VG Roth to Fidelity for ZERO fund?
The OP asked for opinions and the consensus seems to be that this is a waste of time and effort, even though not much of either may be required. However if the OP derives some personal pleasure from it, like with saving $5 on tax software or other activities Bogleheads post about from time to time, then there might be enough value in that to make the switch worthwhile to the OP.Tramper Al wrote: Fri Jan 31, 2025 12:13 pmI use FZILX (this is the "zero" International Equity) and I find some of the discussion here of interest. I don't think it's a great look, though, for forum respondents to tell the OP that his/her interest in a financial matter like this is not worth the time of day. I know I've seen celebratory threads about a fund lowering its expenses from 0.06 to 0.03, for example - maybe its OK if it lands you (still) at Vanguard? Not to mention so many threads about nothing. My international allocation is somewhere near 10 times the example above, putting me in line for savings of $15,000? A little here, a little there, pretty soon we're talking about real money.dave.m wrote: Thu Jan 30, 2025 3:01 pm Has anyone already made the switch? Or considered it and stayed with Vanguard? What is the opinion of the forum about this potential decision?
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Re: Move VG Roth to Fidelity for ZERO fund?
Just like whether you should collect 'dividend' stocks or not, or whether Fidelity "zero expense" juices their fees on other hidden BS like bid-ask or other obscure or altogether hidden fees, which they obviously do, it's ultimately a 'waste of time' discussion, but if it makes you feel good, transfer to the zero ER funds!
Remember time is money. If you're worth $150 an hour and have labored an hour over this (including clicking all the buttons to do the rollover and the forms and the passwords) + forum time here, whelp, there goes your gains on about $1MM transfered!
Remember time is money. If you're worth $150 an hour and have labored an hour over this (including clicking all the buttons to do the rollover and the forms and the passwords) + forum time here, whelp, there goes your gains on about $1MM transfered!
Re: Move VG Roth to Fidelity for ZERO fund?
First, the expense ratio (ER) includes the fee for using the index for any index fund. Therefore, this is not “another reason” FZROX can outperform because the fee is in addition to the other expenses of the fund, it is part of the total expenses that make up a fund’s expense ratio.Minty wrote: Fri Jan 31, 2025 9:04 pm I think another reason FZROX has outperformed and may well continue to outperform is that in addition to waving the ER, Fidelity pays no licensing fee to the benchmark owner--no sliver to S&P or Wilshire. I just checked, Portfolio Visualizer reports that as of 1/31/2025, FZROX has outperformed VTI and VTSAX in every measured time period, by 10 basis points annually for VTI, 14 for VTSAX. Just as Mr. Bogle explained "invest we must," it is also true that "choose we must." Choosing the best performer takes no more time or effort, so that's my approach.
Second, if you read the prospectus for the Fidelity Zero funds, you will see that they pay a fee to S&P for their index (Fidelity Product Services “has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the index”). So you see S&P is involved and is paid.
It may be that because Fidelity designed the index, the contractual fee is lower than using general indexes. However, Fidelity is paying all the expenses of the fund so a lower fee here would just reduce costs to Fidelity.
Re: Move VG Roth to Fidelity for ZERO fund?
It's close enough, IMO. I wouldn't bother with the switch just for this reason.dave.m wrote: Thu Jan 30, 2025 3:01 pm My Roth account at Vanguard currently has 100% investment in VTSAX. My other retirement accounts include bonds and international.
The expense was extremely low for VTSAX, however, it’s not zero.
Re: Move VG Roth to Fidelity for ZERO fund?
Methinks you misunderstand how Portfolio Visualizer worksMinty wrote: Fri Jan 31, 2025 9:04 pm I just checked, Portfolio Visualizer reports that as of 1/31/2025, FZROX has outperformed VTI and VTSAX in every measured time period, by 10 basis points annually for VTI, 14 for VTSAX.

You say PV says FZROX wins in "every measured time period". To disprove that, I merely need to find one time period where it's not true. On my very first guess at a time period I found one:
https://www.portfoliovisualizer.com/bac ... UuswBUt7RY
FZROX lost by 10 bps in the Jan 2020-Dec 2021 time period.
I bet you too can find some time periods like that! Welcome to the fun world of backtesting a couple of situations and drawing inappropriate conclusions!

Re: Move VG Roth to Fidelity for ZERO fund?
I think we may be agreeing that Fidelity has made a better mousetrap. I hope I am not misreading you, but I don't think you are questioning that a fund which does not license a benchmark has lower costs--whoever pays them--than one that does. Or that a producer which has figured out a way to offer a product at a lesser cost, may be able to pass along the savings to consumers.Geologist wrote: Sat Feb 01, 2025 6:56 amFirst, the expense ratio (ER) includes the fee for using the index for any index fund. Therefore, this is not “another reason” FZROX can outperform because the fee is in addition to the other expenses of the fund, it is part of the total expenses that make up a fund’s expense ratio.Minty wrote: Fri Jan 31, 2025 9:04 pm I think another reason FZROX has outperformed and may well continue to outperform is that in addition to waving the ER, Fidelity pays no licensing fee to the benchmark owner--no sliver to S&P or Wilshire. I just checked, Portfolio Visualizer reports that as of 1/31/2025, FZROX has outperformed VTI and VTSAX in every measured time period, by 10 basis points annually for VTI, 14 for VTSAX. Just as Mr. Bogle explained "invest we must," it is also true that "choose we must." Choosing the best performer takes no more time or effort, so that's my approach.
Second, if you read the prospectus for the Fidelity Zero funds, you will see that they pay a fee to S&P for their index (Fidelity Product Services “has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the index”). So you see S&P is involved and is paid.
It may be that because Fidelity designed the index, the contractual fee is lower than using general indexes. However, Fidelity is paying all the expenses of the fund so a lower fee here would just reduce costs to Fidelity.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15